Vedanta shares tumble after US short-seller Viceroy alleges 'Ponzi-like' operations; company rejects report

Shares of Vedanta Ltd fell sharply in Wednesday's trade after US-based investigative financial research firm Viceroy Research released a damning report alleging "material discrepancies" in the conglomerate's financials and operations.

The stock slumped as much as 7.72 per cent to hit a low of Rs 421 before recovering partially to trade 3.50 per cent lower at Rs 440.25. Hindustan Zinc Ltd, subsidiary of Vedanta, also slipped 4.79 per cent to hit a day low of Rs 415.30. At last check, the stock was down 2.56 per cent at Rs 425.05.

The 87-page report by Viceroy, titled Limited Resources, accused Vedanta's parent group of posing "a severe, under-appreciated risk to creditors" and likened its funding model to a "Ponzi scheme."

Viceroy alleged issues such as inflated asset valuations, capex fraud, governance lapses and a 'bait-and-switch' funding mechanism across group entities.

"The Vedanta Group resembles a Ponzi scheme, with capital continuously shuffled between opaque subsidiaries to create a false sense of liquidity and solvency," the report claimed.

Vedanta, in a strong rebuttal, dismissed the report as "a malicious combination of selective misinformation and baseless allegations." The company said the report was timed to "undermine forthcoming corporate initiatives" and was issued without any attempt to seek clarification from Vedanta.

"It only compiles public domain information and sensationalises it for market reaction," the company stated. Vedanta also pointed out that the report is riddled with disclaimers, including that it is for educational purposes and represents opinions, not facts.

The controversy comes at a critical juncture for Vedanta, which is undergoing a corporate restructuring and has been managing high debt levels.

In terms of operational performance, the metals and mining firm posted a mixed set of numbers in the first quarter of FY26.

Vedanta said that the Lanjigarh refinery delivered its highest-ever quarterly alumina production at 587 kilotonnes (kt), marking a 9 per cent year-on-year (YoY) increase and a 36 per cent rise quarter-on-quarter (QoQ).

Ferro chrome production surged by 150 per cent QoQ, underpinned by a 66 per cent sequential increase in ore output.

Vedanta's Demerger Plan

In May this year, the National Company Law Appellate Tribunal (NCLAT) granted an interim stay on an earlier order by the National Company Law Tribunal (NCLT), which had rejected Vedanta's proposed demerger plan.

As part of the plan, Vedanta aims to split into five separate listed entities. While the existing Vedanta entity will remain, four new companies are proposed to be created: Vedanta Aluminium Metal, Vedanta Power, Vedanta Oil & Gas and Vedanta Iron and Steel.

These businesses, currently operating under Vedanta -- the Indian subsidiary of UK-based Vedanta Resources -- are set to be independently listed on Indian stock exchanges.

The company has already obtained the necessary approvals from both its creditors and shareholders to proceed with the restructuring.