Viceroy Research Alleges Vedanta Semiconductor of Using Sham Commodities Trades, Vedanta Denies Allegation

US short seller Viceroy Research has accused Vedanta Ltd’s semiconductor arm, Vedanta Semiconductors Pvt Ltd (VSPL), of operating as a “sham commodities trading operation” designed to sidestep classification as a non‑banking financial company (NBFC) and facilitate emergency fund transfers during a liquidity crunch.

Vedanta rejected the allegations as unfounded, insisting that all VSPL activities fully comply with statutory regulations.

Viceroy’s latest report contends that, in April 2024, Vedanta Ltd (VEDL) reactivated VSPL—not to pursue semiconductor manufacturing but to conduct zero‑margin, paper‑based trades in copper, silver and gold.

According to Viceroy, VSPL secured a short‑term, Rs‑denominated non‑convertible debenture (NCD) worth 10% interest, collateralised by a one‑percent stake in Hindustan Zinc Ltd. The proceeds were then transferred back to VEDL as a 24‑month loan at 12% interest—effectively a conduit to repay offshore creditors and mask the parent’s near‑default.

“This scheme was devised to facilitate Vedanta Ltd’s remittance of brand fees to Vedanta Resources when it faced a severe liquidity crisis,” Viceroy wrote, adding that regulators would need to remain silent for two years to avoid uncovering the paper‑only trading. The report warns that any regulatory intervention before FY 2027 could wipe out the lender group behind the NCD.

Vedanta’s spokesperson swiftly rebuffed the claims, stating, “All business activities of VSPL have been transparently disclosed and are in line with statutory norms. Loans between VSPL and Vedanta Ltd were executed in full compliance with applicable laws, corporate governance standards and both Vedanta Ltd and VSPL have consistently reported accurate loan terms, interest rates and collateral.” The company urged stakeholders to rely solely on verified disclosures and audited financials.

This attack is the latest salvo in Viceroy’s campaign against mining magnate Anil Agarwal’s Vedanta empire. On July 9, 2025, Viceroy disclosed a short position against debt issued by Vedanta Resources, the UK‑based holding company, alleging capital drains from the Indian unit.

Vedanta had dismissed that report as “a malicious combination of selective misinformation,” claiming no prior engagement from Viceroy. The short seller countered that it has yet to receive substantive responses to its queries.

As the dispute escalates, markets will watch closely for any regulatory scrutiny of VSPL’s trading and debt arrangements. Should India’s financial or corporate regulators probe VSPL’s practices, both Vedanta and its offshore creditors could face significant financial and reputational repercussions.

In the meantime, Vedanta’s management maintains that its corporate structures and intercompany loans adhere strictly to India’s FEMA, Companies Act, PMLA and AML frameworks.