Ever since Vedanta listed in London, Anil Agarwal has carefully crafted an image of a self-made, resilient and socially-conscious leader who clawed his way up from scrap metal trading to helm a global mining empire. It is a seductive story of humble origins, daring bets, resilience, philanthropy and commitment to nation-building. For decades, this narrative has helped counter the many financial, environmental and governance controversies that have surrounded the group. It helped bankers and regulators avoid a deeper scrutiny of the sprawling metals and mining conglomerate, which includes multiple global subsidiaries and intermediate holding companies under Vedanta Resources Ltd (VRL).
On 9 July 2025, that beautifully crafted narrative was hit by a bombshell with the publication of an 87-page broadside (Vedanta – Limited Resources) by Viceroy Research, a US-based short-seller and forensic research firm with an increasingly influential track record.
Viceroy’s Allegations: Anatomy of a ‘Ponzi’
Viceroy alleges that Vedanta has a ‘Ponzi-like’ structure propped up by a continuous cycle of new debt to remain solvent. It calls the group parent company, Vedanta Resources a ‘parasite’ draining its publicly traded Vedanta Limited (VEDL) and its subsidiaries keep the parent afloat.
Viceroy’s central contention is that VRL survives solely by forcing VEDL to issue massive dividends, which are funded, not by profits, but by more borrowings. Yet, because VRL holds only 56% of VEDL and smaller stakes in other subsidiaries, each rupee it extracts leaks to minority investors, requiring ever-larger payouts to meet the parent’s obligations.
The Viceroy report puts VRL’s gross debt at US$4.9bn (billion) as of FY24-25 and that of VEDL (including Hindustan Zinc Ltd) at around US$6.7bn. It also says that the real total group debt could be even higher due to undisclosed or off-balance sheet items. Aside from a ‘staggering’ number of legal and regulatory challenges, it says, Vedanta’s key operating subsidiaries reveal a “portfolio riddled with financially unviable assets, undisclosed liabilities, systematic fraud, and profound governance failures.”
The London-listed parent company (delisted in 2018) had then transferred its stakes in Cairn India, Vedanta Aluminium and Madras Aluminium Company to the merged Sesa Sterlite. Despite the objections of minority investors, Mr Agarwal, with a stake of 58% in Sterlite and 55% in Sesa Goa, was able to ram through the transaction. This conveniently moved large chunks of VRL’s liability to the profitable merged Indian company. (Read: Sterlite Mergers: Another self-serving move?)
The technique became a template. Each time, the commodity cycle turned down or debt began to pinch Vedanta, a new restructuring plan would emerge, draped in the language of consolidation, synergy and simplification. Each time, control remained firmly in Mr Agarwal’s hand, while risks migrated to lenders and public shareholders.
Even earlier, in 1998, Mr Agarwal’s Sterlite was one of the three notorious stocks (BPL, Sterlite and Videocon) ramped up by scam-accused Harshad Mehta attempting to return as a market wizard. It ended in a disaster with the Securities and Exchange Board of India (SEBI) uncovering how Sterlite had routed money through intermediaries to corner its own shares.
It also played a role in a controversial bailout of colluding brokers, culminating in the extraordinary and clandestine midnight opening of the Bombay Stock Exchange’s computer system to insert trades and forestall a massive default.
It is a telling commentary on our regulatory environment that SEBI’s findings had no impact on Mr Agarwal’s global expansion or borrowing. (Read: Sterlite and Videocon: The Harshad link). These controversies did nothing to halt Vedanta’s growth and expansions, since regulators and lenders were happy to look the other way.
Debt Spiral
The demerger proposal announced last year is no different in spirit. Viceroy contends that Vedanta’s plan to spin off multiple businesses—aluminium, power, oil & gas—will not ‘unlock value’ but simply shift liabilities from the holding company to newly-listed entities. Those entities will be debt-laden from birth.
In Viceroy’s telling, the group’s combined debt is not the officially acknowledged US$11bn but likely to be far higher due to undisclosed liabilities, intercompany guarantees and questionable asset valuations. Its report accuses the management of ‘systematic looting’ of Hindustan Zinc, including related-party transactions and inflated brand fees.
The scrutiny does not stop at finances. Viceroy says that Vedanta’s auditors in India and abroad are a patchwork of smaller firms, many of which have been fined or sanctioned for professional misconduct. The group’s main auditor in London, MHA MacIntyre Hudson, was censured for poor controls and failing to flag regulatory breaches. Interestingly, Vedanta is its largest client. Several overseas subsidiaries are audited by a two-partner firm operating out of a Bhiwandi apartment, using a Hotmail address.
The implications are clear: If these allegations are substantiated, India’s largest nationalised banks, whose balance sheets have been cleaned up through massive write-offs, are staring at a slow-motion train wreck. These include: State Bank of India, Bank of Baroda and Punjab National Bank, IDBI Bank and Bank of Maharashtra, followed by a clutch of top private banks which, together, have an exposure of Rs30,000 crore-Rs40,000 crore.
Regulators Missing in Action
Will the Viceroy investigation lead to a deeper scrutiny at all? In the past, its exposure of Germany’s Wirecard, as a multi-billion-euro fraud, led to serious regulatory action. Also, Vedanta has yet come up with a detailed rebuttal of Viceroy’s charges backed by details.
But the most remarkable aspect of this unfolding saga is how thoroughly India’s regulatory and supervisory ecosystem has been neutralised. Despite decades of controversy—from share price ramping in the Harshad Mehta era to attempts to delist Vedanta Limited on the cheap—Mr Agarwal’s group has encountered little regulatory resistance.
Even after Viceroy’s explosive exposé, our regulators have remained silent. SEBI has not announced an inquiry into the report, nor has the ministry of corporate affairs (MCA), or the national financial reporting authority (NFRA), which regulates auditors. No investor group or analyst has questioned major lenders, who are all listed entities. Banks are forever eager to lend to politically-connected tycoons and credit rating agencies, whose revenues depend on repeat business, rarely rock the boat. Meanwhile, proxy adviser InGovern has rushed to Vedanta’s defence.
Remember, Vedanta holds some of India’s largest zinc and aluminium operations, substantial oil reserves and has announced ambitious plans to expand its mineral footprint globally. But the pattern of financial engineering is unmistakable. Each restructuring is framed as a rational exercise of consolidation and simplification, but it results in more liabilities accruing to investors. Also, serious governance issues and opaque structures are hidden by lavish advertising campaigns portraying the group as a socially conscious organisation.
The Mirage of Philanthropy
Against this backdrop, Mr Agarwal’s frequent pronouncements about giving away most of his wealth acquire a surreal tone. He is a signatory to The Giving Pledge, alongside Bill Gates, promising to donate 75% of his fortune to charity. But, if the bulk of that fortune consists of shares that are themselves collateral for mountains of debt, what exactly is being pledged?
If a company finances dividends with borrowings, channels cash to a debt-ridden parent, who ultimately shoulders the burden? The answer: Minority investors, public sector lenders and, eventually, taxpayers.
The group stocks initially plummeted in response to Viceroy’s allegations, but investors and traders also take their cues from regulators. With the bulk of promoter shares being pledged, which is another indicator of trouble, stock prices will not collapse unless lenders decide to sell. Also, a day after the Viceroy revelations, chairman Anil Agarwal was confidently announcing plans to double oil & gas production and invest in a new smelting complex.
The lesson, as in so many Indian business sagas, is that lavish image campaigns tend to silence critics and buy media clout. Although retail investors may not get carried away, the cost of credulous lenders, who fail to fulfil their fiduciary responsibility, is ultimately paid by the entire system in the form of write-offs and government-funded recapitalisation of banks.
Comments
aradhnaram.76
5 months ago
For a fraud to happen three conditions have to met. First - Denial at executive level, second - unaccountability at watch dog level and third - citizens falling on caste and religion to keep their insecurities at bay. When all three converge corruption thrives and survives.
Better analysis expected from Ms Dalal. Would have been good to see the real nwtdebt picture of individual Vedanta units, after setting off the value of assets at replacement value. Eg. Vedanta Aluminum [Balco] smelter & allied units are of significant capacity & in good condition. Their replacement value would dwarf the debt on their books after demerger. Similarly with HZL & Oil divn [Cairn]. All have significant monetary value assets, all being a going concern & profit generating status.
Article shouldn't merely total up the companies debt, while hiding the underlying assets for which VRL borrowed money to invest in.
Naturally, VRL is both legally and ethically entitled to use dividends from companies which have been bought by borrowed money. VRL hasn't done physical assets stripping, which is the real red flag which investors and lenders watch out for.
Often the people in the regulatory body have a vested interest in such smart and possibly not completely above board business arrangements, and hence there is a tacit understanding to look the other way.
Essar group had similar trajectory in the form of a parent company in London and hundreds of subsidiaries in various countries all over the world and a no. of shady jurisdictions. The rest is history, you know! Even when a GE turbine was ordered it was routed through a large no. of subsidiaries and the final one in the chain placing order on GE, USA, all making money as passthrough.
Danaher falls into same catagory.. they spun off too many companies public issue..Organic growth may be 2% , but M n A mania with increase in top line ..No wonder Mr Buffet never invests there .
Would SEBI take note and investigate to come out with a note to reassure us? Or will it meet with the now familiar denunciation of 'short sellers' as 'anti national' ot some such??
Good writing. It's difficult to know the exact reason for this write up. Are you sure, you didn't get paid for this? Not only for your journalistic work, but also propagate the propaganda
To question this report shows your ignorance about this group. I know first hand as I was a investor and lost money during their delisting times. So please do not write before doing research. it is well documented that the group pays to do a counter story. I THINK YOU ARE ONE OF THEM.
If you are a regular reader of Moneylife, you would know that we have consistently upheld independent journalism for nearly two decades — often at significant cost. Suggesting payment for our work without a shred of evidence reflects either a poor understanding of how ethical journalism operates or a deliberate attempt to discredit it.
If you genuinely do not understand the basics of journalism — including the responsibility to report facts, highlight systemic issues, and hold power to account — there is little we can do to change that. And as for your rhetorical question about who pays: Viceroy, perhaps? Or is it more likely that you are part of a coordinated, paid trolling operation to post such insinuations?
We value reasoned criticism and encourage debate — but not unfounded accusations that question our integrity without basis.
Shame on you for casting doubts on the bona fides of this newsletter and the writers who have exposed numerous wrongdoings in the financial sector.
Wonder if you are being paid to make this scurrilous charge.
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Even earlier, in 1998, Mr Agarwal’s Sterlite was one of the three notorious stocks (BPL, Sterlite and Videocon) ramped up by scam-accused Harshad Mehta attempting to return as a market wizard. It ended in a disaster with the Securities and Exchange Board of India (SEBI) uncovering how Sterlite had routed money through intermediaries to corner its own shares.
Article shouldn't merely total up the companies debt, while hiding the underlying assets for which VRL borrowed money to invest in.
Naturally, VRL is both legally and ethically entitled to use dividends from companies which have been bought by borrowed money. VRL hasn't done physical assets stripping, which is the real red flag which investors and lenders watch out for.
I would like to know your opinion being an an investigative master.
Regards
Gaurav M Rao
If you genuinely do not understand the basics of journalism — including the responsibility to report facts, highlight systemic issues, and hold power to account — there is little we can do to change that. And as for your rhetorical question about who pays: Viceroy, perhaps? Or is it more likely that you are part of a coordinated, paid trolling operation to post such insinuations?
We value reasoned criticism and encourage debate — but not unfounded accusations that question our integrity without basis.
Wonder if you are being paid to make this scurrilous charge.