Vedanta Group has dismissed US-based Viceroy Research’s report as “a malicious combination of selective misinformation and baseless allegations to discredit the group”, leading the short-seller calling the response as “lazy”.

The company said the report was published without any attempt to contact them and aimed to create “false propaganda”.

“The timing of the report is suspect and could be to undermine the forthcoming corporate initiatives. Our stakeholders are discerning enough to understand such tactics,” the statement read.

“This is the laziest response to any report we have published in our 8+ year history,” Viceroy replied on social media platform X, adding, “We stand behind our work and are happy to take questions.”

Vedanta accused Viceroy of compiling publicly available information and sensationalising it to provoke market reaction.

The group further noted that the report’s authors had included extensive disclaimers stating that the content was educational and opinion-based, and not factual.

Viceroy Research on Wednesday released a 87-page report accusing Anil Agarwal’s Vedanta Resources Ltd (VRL), the UK-based parent of Indian mining conglomerate Vedanta Ltd of being "financially unsustainable" and a "severe risk to creditors" and promoting expensive capital projects it cannot afford to raise fresh capital.

The release of the Viceroy report came just a day before chairman Anil Agarwal was scheduled to address shareholders at the Vedanta Ltd Annual General Meeting.

The report has triggered a sharp fall in Vedanta Ltd’s stock, which declined by up to 8 per cent in intra-day trade before recovering to trade at Rs 440.05 on the BSE, down 3.54 per cent by 2 pm.

Viceroy announced that it had shorted VRL’s debt and described the group structure as “operationally compromised” and “unsustainable”.

The short-seller alleged that VRL is "systematically draining" Vedanta Ltd (VEDL) of its cash reserves to service its own growing debt burden.

“This looting erodes the fundamental value of VEDL, which constitutes the primary collateral for VRL’s own creditors,” the report said, likening the arrangement to that of a Ponzi scheme.

It added that stakeholders of VEDL — including VRL's own lenders — have become the “suckers” in the structure.

The report stated that VRL, a holding company with no significant operations of its own, is being kept afloat by extracting capital from its operating subsidiary. “New credit lines serve only to destroy the PropCo’s only collateral, staving immediate insolvency at the expense of any chance of creditors recovering principal,” it said.

The short-seller also flagged several alleged financial irregularities including, interest expenses far exceeding reported note rates, inflated asset values, systematic capitalisation of expenses to artificially inflate profits and billions of dollars of disputed expenses kept off-balance sheet.

Viceroy criticised what it called the ‘Bait and Switch Funding Model’, alleging that VEDL promotes expensive capital projects it cannot afford in order to raise fresh capital, which is then redirected to the parent company to meet debt obligations.

According to Viceroy, VEDL has seen a $5.6 billion free cash flow shortfall over the past three years compared to the dividends it paid out. The report claimed VEDL’s net debt has surged by 200 per cent or $6.7 billion since FY22, including working capital changes. It added that VEDL has exhausted its cash reserves and hit its borrowing limits.

As of March 31, 2025, VRL’s standalone net debt stood at $4.9 billion, as per its annual report.

Vedanta Group is no stranger to controversy. Long-standing allegations of severe air, water and soil pollution have plagued the Sterlite Copper Plant in Thoothukudi, Tamil Nadu since the 1990s. In 2018, 13 civilians were killed during police firing amid protests against the plant’s reopening, prompting the state government to order a permanent shutdown.

In March 2024, India’s market regulator Sebi directed Vedanta to pay 776 million rupees or USD 9.4 million to Cairn UK Holdings for delayed dividend payments between January 2014 and June 2017. Vedanta was also barred from the securities market for two months along with several directors, including vice-chairman Navin Agarwal.