By Vivek Kumar M and Sethuraman N R
(Reuters) -U.S.-based Viceroy Research has taken a short position against the debt of Vedanta Resources, the UK-based parent of Indian miner Vedanta, alleging that the British firm is “systematically draining” its Indian unit.
A spokesperson for the Vedanta Group said that the report was “a malicious combination of selective misinformation and baseless allegations” and that its authors issued it without contacting the group.
Vedanta plans to split into multiple separate entities and said in 2024 it aims to cut its debt pile by $3 billion in three years. Group Chairman Anil Agarwal launched a plan a year earlier to overhaul the business after an unsuccessful attempt to take Vedanta private in 2020.
The group’s structure is “financially unsustainable” and a major risk to creditors, Viceroy Research said, adding that it had uncovered material discrepancies in its investigation.
Vedanta’s dividend policy serves its parent’s financing needs, not its own cash flow, Viceroy Research said, adding that billions in disputed expenses are hidden off its balance sheet.
Vedanta approved dividends worth 758 billion rupees ($8.8 billion) in the last four fiscal years, while its unit Hindustan Zinc declared 573 billion rupees as dividends over the same period, exchange filings show.
Vedanta Resources holds 56.38% in Vedanta and 61.62% in Hindustan Zinc.
Shares of the Indian miner fell up to 7.8% after the report, but pared losses to trade down 4.8% by 0723 GMT while Hindustan Zinc was down 5%.
Viceroy’s report “largely reiterates known concerns” without offering new insights, which likely explains the stock’s quick partial recovery, said UR Bhat, co-founder of investment platform Alphaniti Fintech.
“The key now is whether institutional investors are influenced by it,” he said.
Vedanta Resources’ net debt on a standalone basis stood at $4.9 billion as of March 31, 2025, according to its annual report.
“We remain focused on the business and growth, and request everyone to avoid speculation and unsubstantiated allegations,” the Vedanta Group spokesperson said in their response.
(Reporting by Hritam Mukherjee, Vivek Kumar M, Kashish Tandon and Bharath Rajeswaran in Bengaluru; Editing by Chandini Monnappa and Mrigank Dhaniwala)
