Vedanta Resources is “systematically draining” Vedanta Ltd, Viceroy Research said.
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DANISH SIDDIQUI

Shares of Vedanta Limited traded 3.59 per cent lower at ₹439.90 as of 1.10 pm on Wednesday, coinciding with the release of a scathing report by short-seller Viceroy Research describing the mining conglomerate as a “financial zombie” with an unsustainable debt structure. The stock opened at ₹461 and touched an intraday low of ₹420.65, with heavy trading volume of 275.54 lakh shares.

Viceroy Research, which disclosed a short position in Vedanta Resources Limited’s debt, characterised the parent company as a “parasite” holding company systematically draining cash from its operating subsidiary Vedanta Limited to service its own $4.9 billion debt burden. The research firm alleged this arrangement resembles a Ponzi scheme that pushes both entities toward insolvency.

The report detailed what it called “material quantitative and qualitative discrepancies” across Vedanta’s operations, including allegations of capex fraud, irreconcilable interest expenses, and inflated asset values. Viceroy claimed the combined Vedanta Group carries approximately $15.7 billion in interest-bearing liabilities with an effective interest rate of around 13 per cent.

Key operational concerns highlighted include risks surrounding Hindustan Zinc Limited, where government options could trigger a potential $10.66 billion liability, and problematic assets like the non-operational Skorpion Mine in Namibia and loss-making Black Mountain Mining in South Africa. The report also flagged Vedanta’s aggressive cash extraction mechanisms, including forced dividends and artificial brand fees totaling $338 million annually.

Viceroy particularly criticised Vedanta’s proposed demerger strategy, arguing it would fail to address fundamental cash flow issues and instead spread insolvency across newly created entities. The research firm described the group as a “house of cards” at high risk of disorderly collapse without radical restructuring.

The intraday decline in Vedanta’s stock price came amid broader market activity, with 60.62 per cent deliverable quantity indicating genuine investor interest rather than purely speculative trading. Vedanta’s 52-week high stands at ₹526.95 reached in December 2024, while the recent low of ₹363 was recorded in April 2025.

Vedanta’s response

In response to the report, Vedanta dismissed the allegations as “a malicious combination of selective misinformation and baseless allegations to discredit the Group.” The company stated that Viceroy issued the report “without making any attempt to contact us with the sole objective creating false propaganda” and described it as merely a compilation of publicly available information that has been “sensationalised” for profit.

Vedanta questioned the timing of the report, suggesting it could be intended “to undermine the forthcoming corporate initiatives.” The company pointed to disclaimers in the Viceroy report stating the research was prepared “for educational purposes only” and represents opinions rather than statements of fact. Vedanta urged stakeholders to “avoid speculation and unsubstantiated allegations” while maintaining focus on business and growth initiatives.

Published on July 9, 2025