Runaya Green Tech, which appears to function as an integrated subsidiary of Hindustan Zinc Ltd (HZL) despite being 100% owned by the Agarwal family, is siphoning profits from HZL under the guise of strategic processing operations, alleges a new report by US-based investigative firm Viceroy Research LLC. Accusing Vedanta Ltd of facilitating large-scale value extraction from its subsidiary through this related-party vendor, the report characterises the scheme as 'margin theft'.
According to the report released on 29 July 2025, Runaya Green Tech functions not as an arm’s length vendor but as an 'integrated HZL subsidiary in all but name'. Viceroy points out that over 90% of Runaya’s revenue and payables are with HZL, indicating a deep financial dependence. However, unlike a typical subsidiary, Runaya is not part of Vedanta’s listed structure. Instead, it is 100% owned by the Agarwal family via a trust domiciled in the Bahamas, shielding it from Vedanta’s creditors and ensuring that all profits flow privately to the promoter group, the report says.
Viceroy Research alleges that HZL is being forced to pay twice for the same activity: first to Runaya for processing metal dross and residue and, again, to purchase back the recovered metal. This margin duplication, it says, results in long-term economic losses to HZL and unjust enrichment of the Agarwal family. The firm warns that such practices amount to 'a slow-motion value drain' from one of Vedanta’s last remaining profitable entities.
Runaya’s reported financial performance raises further concerns. It declared gross margins of 44.5% and operating margins exceeding 16% in FY23-24, unusually high for a residue processor. Viceroy suggests that this could only be possible if HZL is offering highly favourable pricing terms or if Runaya is under-reporting its actual costs. These profits, Viceroy claims, are unjustifiably high and cannot be rationalised without considering related-party influence.
A critical piece of evidence highlighted in the report is that Runaya Green Tech’s growth has been largely financed through upfront payments and advances from HZL. In FY23-24, the vendor reportedly received Rs55 crore in advances, followed by Rs194 crore in FY24-25, to build its processing capabilities. These amounts, Viceroy notes, do not appear in HZL’s public disclosures, indicating a possible breach of regulatory transparency norms.
The transfer of ownership of Runaya in August 2022, from the family of Navin Agarwal (brother of Vedanta chairman Anil Agarwal) to Anil Agarwal’s own offshore trust, is also flagged. Viceroy calls this restructuring a calculated move that consolidated promoter control over the profit-making entity while stripping HZL of the opportunity to develop long-term capabilities in high-margin sectors like waste recovery, metal reclamation, and circular economy initiatives.
Adding to the concerns, the report criticises India Ratings and Research (Ind-Ra) which has rated Runaya entities for five consecutive years without raising any red flags about the underlying conflicts of interest. Ind-Ra’s only caution, Viceroy says, was a vague note on the risk that promoters may 'extract too much, too quickly' from Vedanta Ltd — an understatement, according to the report, of the severity of the alleged financial engineering.
Viceroy argues that the core issue is not just the immediate margin loss suffered by HZL, but the future potential it has surrendered by outsourcing key operations to promoter-controlled entities. Instead of building its own in-house capabilities in environmentally critical sectors, HZL has become a dependent customer of privately held vendor firms like Runaya. “HZL has not developed a platform; it has become a customer,” the report states.
HZL’s financial health has already come under scrutiny. According to Viceroy, the company has paid Rs54,322 crore in dividends since FY22-23 — more than its cumulative free cash flow — while simultaneously incurring brand fees of over Rs1,500 crore for services it reportedly doesn’t use. Additionally, advances totalling Rs1,000 crore have already been booked for FY25-26. The report warns that these cash outflows, combined with rising debt and interest costs, are placing HZL in an increasingly precarious financial position. (Read:
Viceroy Rips into Hindustan Zinc’s Earnings, ICRA’s A1+ Rating and Legal Opinion Defending Promoters)
Viceroy concludes its report with a stark warning: Vedanta’s only remaining profitable subsidiary is being hollowed out through non-transparent related-party deals and, if unchecked, these practices could erode its value irreversibly. The firm calls on regulators, investors, and rating agencies to examine the financial entanglements between HZL and promoter-owned vendors with greater urgency and scrutiny.
As the controversy unfolds, the revelations in Viceroy’s report raise serious questions about Vedanta’s corporate governance practices and whether the interests of public shareholders are being systematically undermined in favour of private enrichment.
Till writing the story, neither Vedanta Ltd nor HZL has issued any reaction to the latest report from Viceroy Research.
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