Vedanta Under Fire_ Short-Seller Viceroy Accuses Parent Company of Ponzi-like Structure.pdf

Viceroy Research alleges that the parent entity behaves like a “parasite,” drawing liquidity from Vedanta Ltd to repay its mounting debt, effectively hollowing out the publicly listed arm.

1. Vedanta Under Fire:
Short-Seller Viceroy
Accuses Parent Company of
Ponzi-like Structure






​​Source: www.moneycontrol.com
US-based activist short-seller Viceroy Research has released a damning report on
Vedanta Resources Ltd (VRL), the parent company of Vedanta Ltd (VEDL), accusing it
of operating a business model that “resembles a Ponzi scheme.” The report claims that
VRL is financially unstable and structurally compromised, relying on continuous
borrowing and extraction of funds from its subsidiaries to stay afloat.

2. Viceroy Research alleges that the parent entity behaves like a “parasite,” drawing
liquidity from Vedanta Ltd to repay its mounting debt, effectively hollowing out the
publicly listed arm. The report argues that the group’s entire debt structure is
unsustainable, and it questions the company’s long-term solvency. According to Viceroy,
Vedanta’s liquidity depends largely on aggressive cash pulling from its operating
businesses, including Hindustan Zinc Ltd (HZL), a significant cash-generating entity
under the group umbrella. The report further points to complex corporate structures, opaque related-party
transactions, and high leverage as warning signs, comparing VRL’s financial
architecture to that of a pyramid reliant on continuous inflows to cover past obligations,
an allegation that intensifies investor and regulatory scrutiny.
Market Reaction and Investor Anxiety
Following the publication of the Viceroy Research report on July 9, Vedanta Ltd shares
experienced heavy intraday selling, plunging nearly 8% before settling around 3.3%
lower at ₹441.30 on the National Stock Exchange (NSE). Hindustan Zinc shares also
declined by 2.5%. The broader Nifty Metal index dipped by 1.38%, reflecting wider
concern across the sector.
The timing of the report, just ahead of potential restructuring and debt refinancing
milestones, further rattled investor sentiment. While Vedanta’s stock attempted a
marginal recovery the following day, trading volumes remained high, suggesting
elevated levels of uncertainty. Analysts believe the market will now demand stronger
evidence of financial discipline and debt reduction strategies from the group in the
coming quarters.
Vedanta’s Rebuttal and Ongoing Concerns
In response, Vedanta Ltd issued a strongly worded statement dismissing the Viceroy
Research report as “malicious, baseless, and misleading.” The company stated that the
report selectively used public data to craft a false narrative aimed at undermining its
reputation and disrupting business continuity. Vedanta added that the Viceroy had not
contacted company officials before publishing the report and accused the firm of
attempting to incite panic among investors and creditors. Calling the report “a sensationalised attack,” Vedanta emphasized its commitment to
transparency and financial integrity. The group is currently undergoing a demerger

3. process initiated in 2023 to simplify its structure and unlock value, which some market
participants believe may help address underlying investor concerns, provided it is
executed with clear governance standards.
Despite Vedanta’s rebuttal, the Viceroy Research report has reignited broader concerns
about corporate debt management among large Indian conglomerates, especially in the
wake of recent short-seller-led controversies involving other major firms.
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Sources:
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