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Vedanta share price: Stock fell 8% on July 9 after Viceroy Research revealed a short position on Vedanta debt, calling it a ‘Ponzi scheme’
Vedanta shares
Vedanta Share Price: Shares of Vedanta traded in the green on July 10, recovering some ground after slumping over 8 per cent intraday a day earlier following serious allegations made by US-based short-seller Viceroy Research against its parent company. In early trade on Wednesday, Vedanta stock was up marginally at Rs 442 apiece.
US Short Seller Viceroy Research’s Allegations
On July 9, Viceroy Research announced that it had taken a short position on the debt of Vedanta Resources Ltd (VRL), alleging that the company functioned like a “Ponzi scheme.” The report described Vedanta’s parent as a “parasite holding company with no significant operations of its own,” accusing it of relying entirely on cash extracted from its “dying host,” Vedanta Limited, to service its debt.
Viceroy further alleged that VRL was systematically draining Vedanta’s resources to meet its own short-term obligations, thereby jeopardizing long-term recovery prospects for creditors. “This resembles a Ponzi scheme where Vedanta stakeholders, including VRL creditors, are the ‘suckers’,” the report stated.
Vedanta Responds To Allegations
Following the stock’s sharp intraday fall, which briefly touched 8 per cent before recovering to close 3 percent lower on Tuesday, Vedanta issued a detailed clarification denying the allegations.
In a filing to the stock exchanges, Vedanta called the Viceroy report “a malicious combination of selective misinformation and baseless allegations” intended solely to damage the Group’s reputation. The company said the report was published without any prior communication or attempt to verify facts, adding that it merely compiled publicly available information and “sensationalised” the context to provoke a market reaction.
“The timing of the report is suspect and may be aimed at undermining our forthcoming corporate initiatives. Our stakeholders are discerning enough to see through such tactics,” the statement added. Vedanta also pointed out that the authors had distanced themselves from accountability by including disclaimers that the report was “for educational purposes only” and reflected mere opinions rather than facts.
Hindustan Zinc Also Recovers
Shares of Hindustan Zinc were also trading in positive territory on Wednesday at Rs 426.85, rebounding after a sharp fall in the previous session. The Viceroy report had claimed that Hindustan Zinc’s resources were being “looted” through related-party transactions involving promoter family-owned entities and unjustifiable brand fee arrangements. It is called Hindustan Zinc “Vedanta’s crown jewel” that “may be its biggest liability.”
Industry experts appeared largely unconvinced by the claims. Rakesh Arora, Managing Partner at Go India Advisors, told CNBC-TV18 that Vedanta’s financial health appeared strong and its various business units were self-sufficient.
“If debt were truly an issue, lenders would never have approved the demerger plan,” Arora said. “Viceroy’s claims seem outdated — they’re two years too late. Fundamentally, there’s no issue at Vedanta,” he added.
He also noted that Vedanta has performed exceptionally well over the last two to three years and expressed confidence that the company’s prospects will continue to improve.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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