Vedanta shares in focus as Viceroy Research claims ₹2,500 crore sham at semiconductor arm

Business Upturn

2 days ago

In a scathing report published on July 18, 2025, Viceroy Research has alleged that Vedanta Limited's (VEDL) subsidiary, Vedanta Semiconductors Private Limited (VSPL), is a sham operation set up to disguise a liquidity crisis and evade regulatory oversight.
According to Viceroy, VSPL is not a semiconductor venture as claimed but rather a shell entity running a fabricated commodities trading operation. The report, titled 'Vedanta – Vedanta Semiconductor: ₹2,500 Crore Dhoke Ka Sammraajy' , argues that VSPL was designed to transfer funds offshore, repay brand fees to parent Vedanta Resources (VRL), and circumvent classification as a Non-Banking Financial Company (NBFC). Liquidity crisis and the creation of VSPL
Viceroy asserts that in April 2024, Vedanta faced a severe liquidity crunch after Indian PSU banks allegedly stopped extending loans due to its precarious financial position. JPMorgan and others reportedly arranged debt, which Vedanta used to fund dividends rather than settling obligations.
To manage the situation, Vedanta raised ₹2,454 crore through Non-Convertible Debentures (NCDs) in May 2024, secured against shares of Hindustan Zinc (HZL). These funds were channelled through VSPL under the guise of a commodities trading loan, carrying a 12% interest rate — significantly higher than the 10% NCD rate. Why Viceroy calls it a sham
Viceroy's report details several red flags in VSPL's operations: VSPL showed ₹416 crore in revenue , ostensibly from trading copper, gold, and silver — at near-zero margins and with no inventory, logistics, or trade credit.
The company's operations showed no hallmarks of genuine commodities trading, with assets such as furniture and equipment liquidated during FY25.
VSPL's revenue reportedly skyrocketed 30,994% YoY, but employee and operating costs halved — consistent with a façade rather than an operating business.
The semiconductor venture, originally planned with Foxconn in 2023, never materialized. After Foxconn's exit, there was no evidence of capex, permits, land acquisition, or R&D — elements essential to a fabrication unit. Governance and audit concerns
Viceroy also criticized VSPL's governance structure: Its directors reportedly have close ties to the Agarwal family.
Its auditors, MP Chitale & Co., have previously been associated with other controversial entities, including IL&FS subsidiaries. Regulatory risks flagged
The report highlighted potential violations of Indian laws and regulations: Regulator / Law Potential Violation RBI / FEMA Disguising offshore borrowing to avoid end-use restrictions SEBI / LODR Inadequate disclosure of collateral & related-party transactions Income Tax General Anti-Avoidance Rules (GAAR) risks PMLA Layered funds & sham trades NFRA Audit quality issues DIPAM / Govt. of India Pledging HZL shares without transparency Semiconductor dream, or mirage?
VSPL was announced as a ₹1.66 lakh crore ($19.5B) semiconductor project with Foxconn in 2023. Foxconn walked away after disagreements, leaving VSPL to continue presenting itself as a semiconductor company despite no evidence of progress.
'VSPL is a regulatory decoy system reliant on fabricated activity for recovery,' the report said. Viceroy's conclusion
Comparing Vedanta's structure to past corporate failures such as Satyam, Enron, and Kingfisher, Viceroy concluded that VSPL is a shell operation designed to 'extract value to offshore entities while maintaining the illusion of business activity.'
The report warned that regulators should act before further damage is done to public investors and national resources.
'Anil Agarwal, ever the non-resident nationalist, chased the semiconductor spotlight, eager to cast himself as the next champion of Indian industry. Instead, he built another channel to extract value to offshore entities.' Call to whistleblowers
Viceroy invited whistleblowers within Vedanta or related entities to share more information about internal misconduct, promising anonymity.
Disclaimer: All statements, allegations, and quotes mentioned in this article are solely based on the report published by Viceroy Research on July 18, 2025. Business Upturn and/or the author are not responsible for the accuracy, completeness, or veracity of the claims made in the report and shall not be held liable for any actions taken based on this information. Readers are advised to exercise their own judgment and verify independently.
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Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.