the story So Far: After Delaware-based Viceroy Research, India Minor Vedanta Limited (VEDL )’s stock fell nearly 8% on Wednesday (July 9, 2025) A small taken On the loan stack of his UK-based parents Vedanta Resource (VRL). In other words, saying that parents will default to repay their debt. It placed the holding company as a “parasite”, in which “the host” took out cash “from the Vedas” with no significant operation of its own important operation. Short seller expressed Perfectly as an accounting for a serious, under-comfortable risk for creditors “was fully unstable, operationally compromised”. Despite the decline on Wednesday, the script away from the fall closed 0.83% higher. At 442.60.
What is small sales?
Broadly, a script’s prices make profits by low-bakement. Although it can fulfill many purposes, such as reducing demand-supply imbalance in the scrip and ensuring better price efficiency, among other things, it can be potentially used to manipulate and drive a scrip prices. Thus, signal of concerns about their intentions and reliability. As an exercise, it buys it back when selling a borrowed scrip in anticipation of price movement downwards and realizing it when realizing a low price level. Let us say, a bottom is a possibility of movement, a personal loan and then sells 10 shares in of 100 episles. Total sale price. Is 1,000. The share price decreases ₹ 85 episi and they choose to buy the quantity back. This time their cost will be a direct benefit of ₹ 850 – The 150.
At the center of the current story, it is important to pay attention to the short seller, i.e., Viceroy Research’s recent shorts on US-based medical properties and Arber Realty Trust. Bloomberg In July last year, it was reported that the federal prosecutors in the US were looking into the later company’s borrowing practices and revelations. The report of the reported investigation has not been made public yet. On the other hand, the Medical Property Trust, mutually decided “Decide and dismissA defamation suit filed against Delaware Small Seller in October 2023. The conditions are kept confidential.
Underlining his next step after his latest short status (against VRL), co-founder Fraser Perning told news publications Ndtv benefits This was in the process of giving her presentations to SEBI, which referred to the specific violations of the law.
Why Viceroy Research Vedanta is calling resources a “parasite”?
The theme of the entire competition allegations of Viceroy Research allegations that the holding company is “systematically draining” to serve its own loan load. The Delaware Short Seller is being forced to get more loans on a recurrent basis by the India -based unit that is reducing its own cash status. Fresh capital is being raised under the guise of operating requirements entering capital-intensive projects that it cannot “tolerate”. Report It is said that the alleged “loot” erases the fundamental value for VRL’s own creditors, for which equity stake in the Indian unit is primary collateral. Thus, if the value of the unit falls, it may originally rearom the results for the ability of the original company to serve.
Another set of allegations states that Vedanta Limited’s interest expenses, or cost of borrowing, are higher than those determined according to their reported interest rates. It continued to move upwards despite payment and reorganization. For perspective, the short seller noticed that the effective interest rate of the original company doubled from 6.4% (2021) in 2025, which is despite taking its gross loan to $ 3.6 billion since FY 2021. The Viceroy gave three possible explanations to the reported paradigm. First, it is feared that additional expenses potentially relate to an unknown, off-balance sheet loan (ie, loan not included in the balance sheet of a company) or a uniform financial obligation, the balance sheet is calculated as expenses in the balance sheet. Other apprehensions believe that intra-period loans are being used to use and repay the higher costs of borrowing before reporting dates to mask the loan level. And finally, the debt rates and/or conditions are said to be physically incorrect.
What else do we know?
The second set of apprehensions belongs to the structure for dividend payments and ‘brand fees’. The two paradigms, as estimated from the report, rotate around an understanding that Vedanta resources have no significant operation of their own and any operating cash flow. Viceroy Research accused the debt obligations of the original company, both major and interest, are funded through dividends and brand charges from their Indian unit.
The short seller eliminates the outline to extract dividends to be “extremely disable” to the Vedal. This is because Vedanta has only 56.38% equity stake in the resource Vedal and about 61.6% in Hindustan Zinc. The latter is a subsidiary of Vedanta Limited. This is potentially to ensure that parents can get the money sought despite limited ownership. Viceroy research says, dividends are not funded by free cash flow, but by receiving further loans and droughting the balance sheet.
The other aspect belongs to the brand fees, or a license fee that allows the payment to use the brand name. Viceroy Research saw coming as “rolling, prepaid advances”, fees provided Vedanta resources with advance liquidity. “These transactions lack commercial justification and are designed to bypass dividend leakage to minority shareholders, including the Government of India,” this argued. The short seller received the detailed VRL $ 338 million in brand fees from Vedanta Limited and its subsidiaries in FY 2024. During this period represented 37% of its net profit. However, according to the miniature seller, any of the paying companies (ie, Vedanta Limited and Assistant Companies) made “meaningful use of the Vedanta brand” in addition to Vedanta.
How has the company responded?
Vedanta Limited organized Viceroy Research reports to be “a malicious combination of selective information and baseless allegations” to discredit the group. The company argued that the small seller’s report demanded “sensationalizing the reference” for the information already made public.
Additionally, the company considered the report of the report to be susceptible and potentially aspiration to “reduce” its corporate initiative. The latter, among other things, was also referring to his proposed demon. Vedanta Limited has intended to maintain its base metals business and separate its subsidiaries, ie Vedanta Aluminum Metal Limited, Talwandi Sabo Power Limited (TSPL), Malko Energy Limited and Vedanta Iron and Steel Limited Standalone. The idea was to “unlock the price and attract big ticket investment” for their development. Viceroy Research, although assessing the proposed Demerger, will spread the bank’s bankruptcy in many, weak institutions; Thus, making them cumbersome with “the inheritance of impaired property and unnatural debt”.
What to make of the entire landscape?
Investment analysts and brokerage have avoided increasing the alarm.
JP Morgan saw in his report on 10 July that Vedanta Limited reported an Ebitda of $ 3.1 billion in FY 2025 and a pure leverage (ie borrowing capacity) of $ 3.1 billion and 2.2 times. “We struggle to see financial stress in VDL with these matrix,” said this. Ahead, ICICI Direct Research In future, allegations of low implications on the possibilities of operating the company and income of the company were also kept. Brokerage Research organized the company to commission new capabilities in its divisions, which will help in cash flow from scaling for more than ₹ 35,000 crore. “With this, it is to trim the pure debt of the group to Ebitda from about 2 times (of Ebitda) in FY 2025, which is moving near 1-bar,” it is said. However, brokerage warned of any possible changes or delays in fulfilling parents’ debt maturity obligations. “Any adverse capital allocation decision in the original company can potentially affect CAPEX, balance sheet and dividend payment at the company level,” read the note.
What are the latest developments from Thursday?
Small seller competition The company’s rebellion alleged that Vedal failed to respond to any of his concerns. Among other things, the miniature seller demanded justification for paying dividends when their cumulative cash flow was converted into deficit in the last three years and how it demanded a loan raising despite an uncertain dividend. For perspective, the short seller had alleged housing for a shortage of free cash flow of $ 5.6 billion against dividend payment of $ 8 billion in the last three years. It also calls for the board to justify its investment in new undertakings as a semiconductor, atomic and glass, when the existing projects allegedly remained “incomplete and weak”. Finally, the short seller also demanded to ask whether demarcated institutions would be subject to guarantee with other subsidiaries and Vedanta resources along with other subsidiaries – similar to the alleged model in their latest short.
Significantly, the small seller published the day of his report before the annual general meeting of the company’s shareholders. Devsani Naidu, the CEO of Vedanta Resource, the original company at Thursday AGM, which was “compiled only the information filled with gross impurities” in the report by the short seller. Calculating Vedanta’s development strategy, he said, “We have created a strong business model, and, at the level of parents, our debt has declined by $ 4 billion in the last three years.” In addition, he underlined that the Vedl would allocate the IN 50,000 crore as capital expenditure in the next 3-4 years, of which the 18% internal rate in each project has been targeted.
Published – July 12, 2025 06:45 am IST
