House of cards built on unsustainable debt: US short-seller on Vedanta Group

US short-seller Viceroy Research on Wednesday called the billionaire Anil Agarwal-led British firm Vedanta Resources a “parasite” that is “systematically draining” its Indian unit, an allegation which the group called as “selective misinformation and baseless” aimed at discrediting it.

The US firm took a short position against the debt of Vedanta Resources, the UK-based parent of Indian miner Vedanta Ltd, alleging that the group “is a house of cards built on a foundation of unsustainable debt, looted assets, and accounting fiction”. “Vedanta Resources Ltd is a ‘parasite’ holding company with no significant operations of its own, propped up by cash extracted from its dying ‘host’: Vedanta Ltd (VEDL),” Viceroy said in an 85-page report.

VEDL has paid dividends worth Rs 75,800 crore in the last four fiscal years, while its unit Hindustan Zinc paid another Rs 57,300 crore over the same period. Viceroy said VEDL has accrued $5.6 billion free cash flow shortfall against dividends over the last three years while its net debt has increased by $6.7 billion since FY22.

Vedanta said the report was “a malicious combination of selective misinformation and baseless allegations” and that its authors issued it without contacting the group.

Shares end 3% lower

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• Shares of Vedanta Ltd ended over 3 per cent lower on Wednesday after the release of the Viceroy Research report

• The stock tanked 7.71 per cent to Rs 421 in intra-day trade on the BSE. Later, it recovered most of the lost ground and ended at Rs 440.80, down 3.38%