Vedanta TSPL Moves Towards Settlement Ahead Of Its Demerger

While discussing India’s growing energy sector, Vedanta Ltd. continues to play a crucial role. Through its subsidiary, Talwandi Sabo Power Limited (TSPL), Vedanta, for decades, has been supplying electricity to Punjab. Vedanta TSPL was in the news for its ongoing dispute with the Chinese company, SEPCO Electric Power Construction Corporation, which had also halted Vedanta’s proposed demerger. In March, even the Mumbai Bench of the National Company Law Tribunal (NCLT) had stalled the proposed demerger scheme filed by Vedanta TSPL due to inadequate disclosures. 

However, Vedanta, in one of the recent developments, has settled its dispute with SEPCO, effectively clearing the path for its proposed demerger along operational product lines. Vedanta demerger, which was initially scheduled for completion in March 2025, is now looking at a 2026 deadline Vedanta, through this demerger, aims at enhancing focus and maintaining transparency across the verticals.  

The Dispute with SEPCO Electric

The issue started when SEPCO Electric, which was responsible for some construction and services at the TSPL plant, claimed that Vedanta TSPL owed it money. SEPCO approached the NCLT to recover these dues, leading to a legal dispute. 

Vedanta TSPL has now entered into a settlement deal with SEPCO Electric Power to resolve all the long-standing disputes relating to the EPC contracts for a 3×660 MW Thermal Power Project. The settlement agreement provides for a full and final resolution of all claims and counterclaims and includes withdrawal of pending arbitration proceedings, Vedanta said.

While financial details remain undisclosed, this development marks a significant step toward operational clarity. This settlement is expected to strengthen Vedanta TSPL operational position, besides enabling smoother execution.

The Role of NCLT

NCLT, which looks after company-related cases, including insolvency, restructuring, and disputes between creditors and companies, played a decisive role in the Vedanta SEPCO dispute. 

In March 2025, the NCTL Mumbai bench dismissed the Vedanta TSPL demerger plan, citing non-disclosure of SEPCO’s INR 1251 crores debt. SEPCO raised doubts about the proposed Vedanta TSPL regarding hiding the liability. The NCLT in Vedanta NCLT stated that non-disclosure of such material debt is against the interest of shareholders and the public.

However, later in May 2025, the National Company Law Appellate Tribunal (NCLAT) granted an interim stay of the order of the NCLT in favour of Vedanta. As per the decision, Vedanta can move ahead with the demerger process, but has to place a bank guarantee of INR 1,245 crores in favour of SEPCO.

Instead of dragging the case for years, Vedanta TSPL has shown readiness to settle the matter, which is a positive sign. With all the disputes with SEPCO resolved, NCLT is expected to approve Vedanta’s proposal for demerger in the next hearing, provided the government does not raise any objection.

The Bigger Picture

The dispute over Vedanta NCLT can be considered as a step forward for the company in its larger demerger process, since it aims to create five independent firms. The names of the entities to be formed after the demerger include Vedanta Aluminium, Vedanta Oil and Gas, Vedanta power, Vedanta Iron and Steel and Vedanta Limited.

Through the proposed restructuring, Vedanta will strengthen its focus, attract sector-specific global investors, and unlock value. The demerger, when completed, would make operations more efficient and streamlined, help attract capital for expansion, and potentially boost overall market valuation.

Final Thoughts

The agreement between Vedanta TSPL and SEPCO Electric highlights the importance of being transparent and ethical in business, especially when it’s about resolving corporate affairs. Rather than wasting its time in the Vedanta NCLT case about SEPCO, the company settled the matter, which will help not just in strengthening Vedanta’s operations but will also prove beneficial for Punjab and its people.

As the demand for power in India and the rest of the world increases rapidly, legendary companies such as Vedanta are making a significant contribution to meeting the energy demand. Vedanta TSPL plant, with its massive capacity and significance to Punjab, is one of the strongest examples of how corporate responsibility and good governance can move in parallel.

This strategic decision will not only make Vedanta a more credible power producer but will also help in India’s growth journey.