U.S.-based short-seller Viceroy Research has released a scathing 87-page report accusing Vedanta Resources Ltd (VRL)—the parent company of India-listed Vedanta Ltd (VEDL)—of operating a financially unsustainable and “Ponzi-like” corporate structure. The report, titled Limited Resources, alleges that VRL is systematically draining its Indian subsidiary to service its mounting debt, putting both shareholders and creditors at significant risk.
According to Viceroy, VRL is a “parasite” holding company with no significant operations of its own, entirely dependent on extracting cash from VEDL. The report claims that VRL compels VEDL to issue disproportionately large dividends funded not by genuine free cash flows, but by fresh borrowings, aggressive working capital tactics, and depletion of cash reserves. This, Viceroy argues, creates a “terminal feedback loop” that erodes VEDL’s intrinsic value and threatens the group’s solvency2.
The report also highlights alleged governance failures, inflated asset valuations, off-balance-sheet liabilities, and capital expenditure fraud. Viceroy disclosed that it has taken a short position on VRL’s debt, betting on a decline in its financial stability3.
In response, Vedanta Group strongly refuted the allegations, calling the report a “malicious combination of selective misinformation and baseless allegations.” The company stated that the report was issued without any attempt to seek clarification and was designed to create false propaganda and manipulate market sentiment. Vedanta emphasized that the report merely compiles public domain information and sensationalizes it for profit4.
The controversy comes at a critical time for Vedanta, which is undergoing a major corporate restructuring to demerge into five separate listed entities. While the company maintains that it has secured approvals from shareholders and creditors, the Viceroy report has cast a shadow over its financial health and governance practices.
As the dust settles, investors and regulators will be closely watching how Vedanta addresses these serious allegations and whether further scrutiny will follow.