Shares of Anil Agarwal-owned mining conglomerate Vedanta Ltd fell over 3% on July 9 after short seller Viceroy Research issued a report on its parent firm Vedanta Resources, saying it "resembles a Ponzi scheme".

The Viceroy report said the group structure is "financially unsustainable, operationally compromised and resembles a Ponzi scheme".

On July 9, Vedanta shares on NSE closed trading 3.3% lower at Rs 441.3 apiece. The shares fell as low as nearly 8% on an intraday basis on July 9. Shares of another Vedanta firm, Hindustan Zinc, closed trading 2.5% lower at Rs 425.3 apiece. Consequently, the Nifty Metal index closed trading 1.38% lower with Vedanta, Hindustan Copper leading the losses.


The report comes as Vedanta plans to split into multiple separate listed entities. Group Chairman Anil Agarwal launched the plan in 2023 to overhaul the business following an unsuccessful attempt to take Vedanta private in 2020.

Vedanta Resources said in June 2024 that it will seek to cut its debt pile by $3 billion in the following three years.

"Our thesis rests on a simple but critical dynamic: Vedanta Resources Ltd is a "parasite" holding company with no significant operations of its own, propped up entirely by cash extracted from its dying "host": Vedanta Ltd. This creates a self-destructive feedback loop," said Viceroy in the report.

"Vedanta Resources cannot meet its short-term financial obligations without looting Vedanta Ltd. This threatens VEDL as a going concern, the equity of which is the collateral securing Vedanta Resources' principal. This strategy resembles a Ponzi scheme," added Viceroy.

Vedanta issued a clarification with regard to the report by terming it as "a malicious combination of selective misinformation and baseless allegations".

"Viceroy Research report is a malicious combination of selective misinformation and baseless allegations to discredit the Group," said Vedanta.

"Viceroy Research report issued without making any attempt to contact us," added Vedanta.

Vedanta's interest expenses vastly exceed its reported note rates, ad continues to increase despite paydowns and restructuring, according to the Viceroy note, which further stated that expenses across operating subsidiaries are systematically capitalised, artificially inflating profits and asset values. "This is a material misrepresentation," the report said.

As of March 31, 2025, Vedanta Resources' net debt on a standalone basis stood at $4.9 billion, according to its annual report.

Vedanta Resources is "systematically draining" Vedanta Ltd, Viceroy Research said.

"Despite trimming its gross debt by $3.6 billion (42%) since FY21, Vedanta Resources' effective interest rate has increased by 145% over the same period: from 6.4% to 15.8%. We cannot find any way to reconcile an effective 16% interest expense against Vedanta’s disclosed borrowings. Vedanta Resources generates no operating free cash flow. Its interest and principal obligations are funded entirely through dividends and “brand fees” extracted from VEDL, neither of which is sustainable nor arms-length," added Viceroy Research.

The short seller said VEDL’s capital structure is subject to immense stress due to Vedanta Resources 'looting'. It also presents unreconcilable differences in reported interest rates and actual interest paid, said Viceroy.

"(Anil) Agarwal often promotes fictitious asset sales in order to raise bridge financing. Vedanta’s previous actions also show a pattern of desperate attempts to remit cash to Vedanta Resources, sometimes circumventing directors and minority shareholders," said Viceroy.

Regarding Hindustan Zinc, the short seller said "it is a legal and financial minefield".

"HZL is not merely a troubled company; it is a legal and financial minefield. The business is entangled in contract breaches, regulatory violations, and related-party transactions designed to extract value at the expense of the Indian public," said Viceroy.

"Vedanta presents systematic governance failures across management and auditors, including inappropriate auditor choices," it said. "Any one of the multitude of risks we outline is sufficient to topple Vedanta's already fragile, Ponzi-like structure," the report said.

Viceroy Research is known for exposing frauds like Wirecard and Steinhoff.