US short-seller Viceroy Research makes scathing claims on Vedanta Group

Vedanta accused Viceroy of compiling publicly available information and sensationalising it to provoke market reaction.
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DANISH SIDDIQUI

In yet another attack on an Indian conglomerate, a US short-seller, Viceroy Research, has hit out at Anil Agarwal-owned Vedanta Group, calling holding company Vedanta Resources (VRL) a ‘parasite’ and a ‘financial zombie’ and its listed subsidiary Vedanta Ltd (VEDL) a ‘dying host’.

Viceroy Research, which has a short position on VRL’s debt stack, said the Vedanta group structure was “financially unsustainable, operationally compromised” and was a “severe, under-appreciated risk to creditors”.

“VRL is a ‘parasite’ holding company with no significant operations of its own, propped up entirely by cash extracted from its dying ‘host’: VEDL,” it said.

VRL and its web of intermediate holding companies held no material operating assets and carried about $4.9 billion in gross interest-bearing liabilities as of FY25, said the report. The survival of VRL depends on its ability to extract cash from publicly listed VEDL, which holds stakes in group companies including Hindustan Zinc and BALCO, it pointed out.

The upstreaming process is highly inefficient because a significant portion of dividends issued leaks to minority shareholders, as VRL holds only 56 per cent of Vedanta and 62 per cent of Hindustan Zinc.

Among other allegations, the report said VRL has extracted $338 million as “brand fee” annually from VEDL and its subsidiaries in FY24 alone.

VRL used loans from VEDL subsidiaries to purchase VEDL stock on-market, but over $122 million of VEDL loans were “written off” in a blatant violation of the Companies Act, it said.

The 87-page Viceroy Research report accused VRL of draining VEDL, forcing it to take on ever-increasing leverage and deplete its cash reserves. VRL’s actions to meet its short-term obligations impaired its creditors’ ability to recover their principal, a situation that resembled a ‘Ponzi scheme’, it said. VEDL promoted capital-intensive projects that it could not afford to raise fresh capital, which was paid out to VRL, it alleged.

Other allegations included inflated asset values of VEDL’s subsidiaries, capex fraud, expenses being kept off-balance sheet, and governance failure.

Shares of Vedanta and Hindustan Zinc slipped 3 per cent each to Rs 441 and Rs 425 on Wednesday.

In 2023, another US-based short seller, Hindenburg Research had published a scathing report on billionaire Gautam Adani group companies and wiped out billions off the group’s market value. However, early this year, Hindenburg itself decided to cease operations, raising serious questions about the firm’s practices to make quick gains.

Vedanta Denies

Vedanta Group dismissed Viceroy Research report as “a malicious combination of selective misinformation and baseless allegations to discredit the group.

The release of the Viceroy report came just a day before chairman Anil Agarwal was scheduled to address shareholders at the Vedanta Ltd Annual General Meeting.

The company said the report was published without any attempt to contact them and aimed to create “false propaganda”.

“The timing of the report is suspect and could be to undermine the forthcoming corporate initiatives. Our stakeholders are discerning enough to understand such tactics,” said the statement.

Vedanta accused Viceroy of compiling publicly available information and sensationalising it to provoke market reaction.

The group further noted that the report’s authors had included extensive disclaimers stating that the content was educational and opinion-based, and not factual, it said.

In fact, the Viceroy Research is the second attack on the Vedanta Group. In 2018, VRL was delisted from the London Stock Exchange amid protests outside its final annual general meeting. Volcan Investments spent $1 billion to buy-back its shares listed on LSE.

Published on July 9, 2025