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Informist, Monday, Jul. 21, 2025

 

NEW DELHI – US-based Viceroy Research LLC Friday alleged Vedanta Ltd.'s wholly-owned subsidiary Vedanta Semiconductor Pvt. Ltd. is a "sham commodities trading operation." The research firm admits to holding short or long positions based on its research reports on companies worldwide.

 

Viceroy Research alleged in its Friday's report that Vedanta devised a scheme to facilitate remittance of brand fees to its parent company Vedanta Resources Ltd. in April when it faced a severe liquidity crisis. Under the alleged scheme, Vedanta Semiconductor tapped offshore lenders in May 2024 for a short-term rupee-denominated non-convertible debentures issue of INR 24.54 billion at an interest rate of 10% and provided as security its parent Vedanta's stake in Hindustan Zinc Ltd., equivalent to 1% of shares of Hindustan Zinc.

 

Viceroy Research alleged Vedanta Semiconductor then began trading commodities like copper, silver, and gold on a zero-margin basis which is "reminiscent of wash trading." The semiconductor subsidiary in 2024-25 (Apr-Mar) remitted the proceeds from the debt issue to Vedanta through a 24-month 12% loan of INR 24.08 billion, "with the spread intended to cover the sham operation's costs," the research-cum-short seller firm said in its report.

 

It alleged that due to the scheme deployed, Vedanta Semiconductor, "superficially an operating entity, would face reduced scrutiny for loan repayments under" various legal frameworks under the Foreign Exchange Management Act, 1999, Companies Act, 2013, and Prevention of Money Laundering Act, 2002. "Large offshore transfers to or from non-operating entities are likely to attract FEMA (Foreign Exchange Management Act) scrutiny, exactly what VRL (Vedanta Resources) wanted to avoid," Viceroy Research alleged.

 

Vedanta Ltd. has so far not issued a clarification on Friday's report by Viceroy Research. The short seller had earlier this month come out with a few reports with other allegations pertaining to the Vedanta group. In a stock exchange filing late Friday, Vedanta said it had sought an independent legal opinion from former chief justice D.Y. Chandrachud "in relation to allegations made in the Viceroy Research report concerning the Group." In the legal opinion of Chandrachud, the elements required to establish defamation, both civil and criminal, are satisfied given that Viceroy Research has publicly published "reputationally damaging statements directly targeting" the company.

 

At 1041 IST, shares of Vedanta were trading up 1.4% at INR 452.05 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Rajesh Gajra

Edited by Deepshikha Bhardwaj

 

 

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