New Delhi: Financial research firm Viceroy Research has released a scathing report on Vedanta Resources Ltd (VRL) and its listed subsidiary Vedanta Ltd (VEDL), calling the group’s financial structure “unsustainable” and comparing it to a “Ponzi-like scheme” that relies on aggressive upstreaming of cash from its operating companies to service holding-level debt.
“We are short the debt stack of Vedanta Resources... The entire group structure is financially unsustainable, operationally compromised, and poses a severe, under-appreciated risk to creditors,” Viceroy stated in its report released on Wednesday.
According to the report, VRL—controlled by the Agarwal family—acts as a “parasite” that survives by systematically extracting dividends and cash from its “host” entities such as VEDL, Hindustan Zinc Ltd (HZL), BALCO, and Cairn Oil & Gas. Viceroy alleges that VEDL has issued excessive dividends, not from free cash flow, but through borrowings, to fund VRL’s obligations. The report adds that this upstreaming results in material tax leakage and dilution for minority shareholders.
Viceroy claims that between FY22 and FY25, VEDL’s net debt increased by more than $6.7 billion, and its cash reserves fell significantly. It argues that the more VEDL is forced to fund VRL’s liabilities, the more it erodes the parent company’s own collateral base. “Servicing VRL’s debt accelerates the erosion of VEDL’s balance sheet, which in turn erodes the value of VRL’s only collateral,” the report said.
The report accuses Vedanta of capitalising operating expenses to artificially inflate both profits and asset values. It says interest costs reported by the group do not align with disclosed borrowings, implying the presence of undisclosed or off-balance-sheet debt. Viceroy also claims that non-performing subsidiaries like Electrosteel Steels Ltd (ESL) and Konkola Copper Mines (KCM) in Zambia are being carried at overstated valuations despite generating negative earnings.
The research firm points to unusually high “brand fees” charged by VRL to its subsidiaries as a tool for cash extraction. According to Viceroy, these fees run into hundreds of millions of dollars annually and have no clear commercial justification. It argues that these practices help artificially support VEDL’s share price, which is then used as collateral by VRL to raise further debt.
The report devotes particular focus to Hindustan Zinc Ltd, calling it a “legal and financial minefield.” Viceroy warns that a shareholder agreement between VEDL and the Government of India may give the government a call option that allows it to repurchase VEDL’s stake at a discount of up to 50 per cent. It also highlights the CBI investigation into the original disinvestment of HZL and alleges that VRL’s imposition of brand fees on HZL was done without approval from government-appointed board members.
Viceroy criticises Vedanta’s plan to demerge VEDL into multiple independent companies, arguing that it will not solve the group’s debt or governance challenges. “It will merely spread the group’s insolvency across multiple, weaker entities,” the report said. It also flagged high senior management churn across the group since the demerger announcement, including the exits of CEOs, CFOs, and other senior leadership from key business units.
Viceroy raised red flags about the quality of auditors appointed across several Vedanta entities, claiming that some have faced sanctions or operate with limited oversight. It also alleged that offshore holding companies—some of which are incorporated in tax havens—are used to obscure governance and avoid scrutiny. One such holding company, the report says, is audited by a two-partner firm that operates out of a residential apartment and uses a Hotmail address.
In response to the report, Vedanta issued a media statement on Wednesday, describing Viceroy’s claims as misleading and unfounded. “The Viceroy research group report on Vedanta – Limited Resources, published on 09 July 2025, is a malicious combination of selective misinformation and baseless allegations to discredit the Group,” the company said.
Vedanta said the report was released “without making any attempt to contact us with the sole objective [of] creating false propaganda.” The company added, “It only contains compilation of various information – which is already in the public domain, but the authors have tried to sensationalise the context to profiteer from market reaction.”
Calling the timing of the report “suspect,” Vedanta suggested it was intended to “undermine the forthcoming corporate initiatives.” The company added, “Our stakeholders are discerning enough to understand such tactics. In fact, to avoid any responsibility – authors of the report have added various disclaimers that the report has been prepared for educational purposes only and expresses their opinions and are not statements of fact.”
Vedanta concluded, “We remain focused on the business and growth, and request everyone to avoid speculation and unsubstantiated allegations.”
Despite the company’s denial, Viceroy reiterated its recommendation that VRL’s creditors initiate a restructuring process and install independent oversight. “Creditors should call their debt and restructure this debt alongside VEDL, including the appointment of an unconflicted board and management team which operates in the interest of VEDL, not the PropCo,” the report said.
Viceroy described the Vedanta group as “a house of cards built on a foundation of unsustainable debt, looted assets, and accounting fiction,” and warned of a disorderly collapse if systemic issues were not urgently addressed.
