Shares of Vedanta Ltd and its subsidiary Hindustan Zinc fell sharply, plunging as much as 8% in trade on July 9, after US-based short-seller Viceroy Research published a scathing report comparing the group’s financial setup to a ‘Ponzi-like scheme.’
In the report, Viceroy alleged that Vedanta Resources, the parent holding company, is financially unsustainable and survives only by drawing cash from its operating arm, Vedanta. “Vedanta Resources is a parasite holding company with no meaningful operations of its own, propped up entirely by cash extracted from its dying host, that is, Vedanta,” the report said. “This creates a self-destructive feedback loop.”
According to Viceroy, Vedanta Resources cannot meet its short-term financial obligations without draining Vedanta, a structure it claims puts the entire group at risk. “This threatens Vedanta as a going concern,” it noted, adding that the arrangement strongly resembles a Ponzi scheme.
The report also flagged issues around interest expenses and accounting practices. Viceroy alleged that Vedanta’s interest costs significantly exceed the stated borrowing rates and have continued to rise despite debt reductions and restructuring. It further claimed that expenses across subsidiaries are being systematically capitalised, giving an inflated view of profits and asset values, a practice the short-seller described as ‘material misrepresentation.’
As of the end of FY25, Vedanta Resources’ standalone net debt stood at $4.9 billion, according to its annual report. Viceroy noted that despite reducing gross debt by $3.6 billion since FY21, the company’s effective interest rate had jumped from 6.4% to 15.8%.
“We cannot reconcile a 16% rest burden with Vedanta’s reported borrowings,” the report stated. “Vedanta Resources generates no operating free cash flow. Its interest and principal repayments are entirely funded through dividends and brand fees extracted from Vedanta, neither of which is sustainable or at arm’s length.”
The report accused Vedanta’s leadership of promoting ‘fictitious asset sales’ to secure bridge financing, while pointing to a history of allegedly bypassing board oversight and minority shareholder interests when transferring funds to Vedanta Resources.
Hindustan Zinc also came under fire, with Viceroy calling it a ‘legal and financial minefield’ entangled in contract breaches, regulatory violations and related-party deals designed to extract value from public shareholders. The firm also raised concerns around corporate governance, citing weak oversight by management and the choice of auditors.
“Any one of the multitude of risks we outline is sufficient to topple Vedanta’s already fragile, Ponzi-like structure,” the report concluded.
