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Vedanta Shareholder Moves Supreme Court over US$500mn Brand Fee, Calls It Unjustifiable and Harmful to Investors
Moneylife Digital Team 19 September 2025
Investor Interest
Mumbai-based Girish Mittal, a long-term shareholder of Vedanta Ltd (VEDL) and Hindustan Zinc Ltd (HZL), has filed an intervention application in a public interest litigation (PIL) before the Supreme Court, challenging what he described as 'excessive and opaque' brand fee arrangements that allegedly drain shareholder value and undermine corporate governance.
 
Mr Mittal, who holds shares in VEDL and HZL, says that he will personally attend the hearing in the Supreme Court on 19th September when the PIL comes up. He says he has already raised concerns with market regulator Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI), but has not received any response.
 
According to Mr Mittal, Vedanta Resources — the parent company of Vedanta Ltd — charges its Indian subsidiaries brand fees that could touch US$500mn (million) or around Rs4,100 crore in FY25-26 alone. He claimed that such payments have a 'material and measurable' impact on shareholder value, translating to a US$5.55bn (billion) erosion in market-capitalisation when benchmarked against a conservative price-to-earnings multiple.
 
“These fees are not only disproportionate but also lack any commercial justification. They serve as a mechanism for upstreaming cash from Indian entities to the parent company, raising serious questions about governance, minority rights, and regulatory oversight,” Mr Mittal says in his statement.
 
His intervention rests on several grounds:
• The brand fee payments exceed Rs2,000 crore annually, breaching the Rs1,000 crore materiality threshold under SEBI’s Listing Obligations and Disclosure Requirements (LODR) regulations, which makes shareholder approval mandatory.
 
• Vedanta has not put these transactions to a vote of disinterested shareholders, even though promoter entities are legally required to abstain.
 
• Comparable market norms do not justify brand fees of this magnitude.
 
• The Viceroy Research reports, which previously flagged governance lapses at the group, highlight systemic failures.
 
• Most independent directors of the group, Mr Mittal alleged, have past employment ties with Vedanta and have failed to discharge fiduciary responsibilities.
 
• Precedents, such as the Xiaomi case, where the directorate of enforcement (ED) scrutinised similar upstreaming practices, show that such arrangements can face regulatory penalties.
 
Mr Mittal described the matter as a 'call to action' for shareholders, regulators and the government. He urged VEDL and HZL investors to demand transparency, disclosure and their right to vote on material related-party transactions. 
 
He pressed SEBI to investigate the legality of the brand fee agreements under LODR and the Companies Act, and called on RBI to examine foreign exchange implications. He also appealed to the government to ensure that “strategic national assets are not compromised by extractive corporate practices.”
 
“These brand fees should be stopped immediately, and the fees already expatriated clawed back to Vedanta and Hindustan Zinc. They are commercially unjustifiable, legally voidable, and a direct assault on shareholder value,” Mr Mittal asserted.
 
The Supreme Court will take up the PIL on 19th September, with Mr Mittal seeking to ensure that minority shareholder concerns are placed before the bench.
 
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Comments
kocharbipin2024
3 months ago
Many multinational companies like Suzuki, Siemens etc are siphoning out tens of thousands of crores out of the country through the levy of brand fees aka royalties - unjustly enriching themselves at the cost of the their Indian shareholders and the country
As a result even local promoters have started levying brand fees - Tata Sons too is now collecting hundreds of crores from its investee companies under guise of brand fees.

It is high time the Supreme Court puts an end to this practice.

Reply
mantha31
3 months ago
Taking Viceroy comments and finds as sacrosanct would be foolish, just like what Hidenburg wanted to do to Adani - all fake news and these are all short sellers who try to profit and loot at others expense. It is foolish on part of Mittal to.file a PIL without ascertaining the the details and the antecedents of Viceroy. Well some are like this- Gora boldiya to Sashi hai- slavish mentality.
Reply
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