Vedanta Faces ₹1,255 Crore Setback as Odisha Government

Mining major Vedanta Limited has received a major setback after the Odisha government raised a demand of over ₹1,255 crore on its subsidiary ESL Steel Limited, citing alleged shortfall in mining production and violations of regulatory norms.

Vedanta Hit by ₹1,255 Crore Demand from Odisha Government

India’s leading mining and metals company Vedanta Limited has suffered a significant blow after the Odisha government issued a hefty demand notice to its subsidiary ESL Steel Limited. The demand, exceeding ₹1,255 crore, relates to alleged under-production in mining operations and violations of government-mandated mining norms, sparking concern in the market.

Why Was the ₹1,255 Crore Notice Issued?

The dispute originates from Koira Circle in Odisha’s Keonjhar district. The Deputy Director of Mines office has issued two separate demand notices to ESL Steel Limited.

According to the notices, the company has been asked to pay a total amount of ₹12,55,37,61,591 (approximately ₹1,255 crore).

The Odisha government alleges that ESL Steel failed to carry out mining operations in line with the commitments outlined in its mining lease agreements. The case falls under Rule 12(A) of the Minerals Concession Rules, 2016.

What Does Rule 12(A) Say?

Under this rule, companies awarded mining leases are required to achieve a minimum annual production and dispatch target. If a company fails to meet the prescribed output, it must compensate the government for the shortfall.

The government claims ESL Steel did not meet these mandatory targets.

Which Mines Are Involved?

The demand relates primarily to ESL Steel’s BICO and Feegrade mining leases.

• A Mine Development and Production Agreement (MDPA) was signed between the company and the Odisha government on November 15, 2021

• As per the official notice, ESL Steel failed to achieve the production and dispatch targets in the fourth year of mine operations

Based on this shortfall, the state government has imposed the financial demand as per applicable mining regulations.

Company Response: “We Will Contest the Demand”

Following the issuance of the notices, ESL Steel Limited has strongly rejected the government’s claims.

The company has stated that it does not agree with the calculations or the basis on which the demand has been raised. According to ESL Steel, the notice is legally and factually flawed.

In a disclosure to stock exchanges, the company said it is:

• Conducting a detailed review of the demand notices

• Planning to pursue all available legal remedies

• Considering approaching courts to seek a stay on the demand

• Aiming to have the notices quashed entirely

The company has expressed confidence that its legal position is strong.

Impact on Vedanta Share Price

Despite the development, Vedanta Limited’s stock showed resilience. In Friday’s trading session, the company’s shares closed 0.78% higher at ₹681.05.

Conclusion

The ₹1,255 crore demand marks a major regulatory challenge for Vedanta and its subsidiary ESL Steel. While the Odisha government has taken a firm stance over alleged mining shortfalls, the company is preparing for a legal battle that could determine the final outcome. The case is expected to remain in focus for investors and the mining sector in the coming weeks.