Following a report by Viceroy Research, a U.S. short seller, shares of Indian miner Vedanta Ltd. fell by almost 8% during the day before modestly rising again. The company declared its stance against Vedanta Resources, its parent company based in the UK, alleging that it is “systematically draining” the Indian subsidiary through off-balance sheet spending and exorbitant dividends.
The group’s structure is deemed financially unsustainable in Viceroy’s comprehensive analysis, which also warns that creditor risk is increasing and describes the arrangement as “Ponzi-like.” Over the last four years, Vedanta and its subsidiary Hindustan Zinc have paid out dividends of around ₹758 billion (~$8.8 billion) and ₹573 billion, respectively, indicating that the parent company put its own funding ahead of the company’s operational stability.
Denouncing the article as a “malicious combination of selective misinformation and baseless allegations,” Vedanta Ltd. responded fiercely. Through strategic divestitures and restructuring, the company underlined that it is carrying out a debt reduction plan with the goal of reducing liabilities by $3 billion over three years.
Market observers observe that the study largely restates well-known issues, pointing to Vedanta’s partial recovery as proof that no fresh information has been disclosed. Whether institutional and overseas investors will scrutinise the group’s intricate structure and long-term cash flow sustainability is currently the most important question.
