Latest news with #AnilAgarwal-owned
The Hindu
5 days ago
- Business
- The Hindu
Who is Viceroy Research? The short-seller targetting Vedanta Group
A U.S. short-seller, Viceroy Research, has flung allegations at Anil Agarwal-owned Vedanta Group, calling Vedanta Resources (VRL) a 'parasite' and a 'financial zombie' and its listed subsidiary Vedanta Ltd (VEDL) a 'dying host'. Viceroy Research, which has a short position on VRL's debt stack, said the Vedanta group structure was 'financially unsustainable, operationally compromised' and was a 'severe, under-appreciated risk to creditors'. The 87-page Viceroy Research report accused VRL of draining VEDL, forcing it to take on more debt and deplete its cash reserves, impaired creditors' ability to recover their principal, a situation that resembled a 'Ponzi scheme', it said. VEDL promoted capital-intensive projects that it could not afford to raise fresh capital, which was paid out to VRL, it alleged. Vedanta Group dismissed Viceroy Research report as 'a malicious combination of selective misinformation and baseless allegations to discredit the group'. Who is Vicereoy Research? According to its website, Viceroy Research LLC is an investigative financial research firm that is registered in Delaware, USA. The firm was founded in 2016 by Fraser John Perring and his Australian colleagues Aiden Lau and Gabriel Bernarde. The company first gained global scrutiny in 2017 with its research on South Africa's Steinhoff International. As a result of the investigation, extensive accounting errors were discovered and the company's shares fell more than 90%, wiping out billions of dollars in shareholder value. The firm also made a name for itself when it placed a bet against companies such as Elon Musk's Tesla. The short-seller has published reports on 29 businesses, according to their website. In 2018, it published a report on Advanced Micro Devices Inc and expanding on the financial impact of the CTS Labs vulnerabilities. In 2022, it targeted Truecaller for intentionally misdirecting valid criticism. In 2023, it filed a report on Tokyo-based Abalance for evading U.S. duties. The latest report on Vedanta Group is expected to have an impact on the Indian Stock Exchange. Shares of mining giant Vedanta dropped 3.38% to end at ₹440.80 on the BSE after the report. Viceroy's past controversies Medical Properties Trust, an Alabama-based real estate investment trust, filed a defamation suit against Viceroy in 2023, which was settled confidentially the next year. The South African FSCA had penalized the short-seller for making inaccurate and misleading claims on 'Capitec.'
The Hindu
6 days ago
- Business
- The Hindu
U.S. short-seller Viceroy Research makes scathing claims on Vedanta Group
A U.S. short-seller, Viceroy Research, has flung allegations at Anil Agarwal-owned Vedanta Group, calling Vedanta Resources (VRL) a 'parasite' and a 'financial zombie' and its listed subsidiary Vedanta Ltd (VEDL) a 'dying host'. Viceroy Research, which has a short position on VRL's debt stack, said the Vedanta group structure was 'financially unsustainable, operationally compromised' and was a 'severe, under-appreciated risk to creditors'. 'VRL is a 'parasite' holding company with no significant operations of its own, propped up entirely by cash extracted from its dying 'host': VEDL,' it said. VRL and its web of intermediate holding companies held no material operating assets and carried about $4.9 billion in gross interest-bearing liabilities as of FY25, said the report. The survival of VRL depends on its ability to extract cash from publicly listed VEDL, which holds stakes in group companies including Hindustan Zinc and BALCO, it said. The upstreaming process was inefficient because a significant portion of dividends issued leaks to minority shareholders, as VRL holds only 56% of Vedanta and 62% of Hindustan Zinc. Among other allegations, the report said VRL has extracted $338 million as 'brand fee' annually from VEDL and its subsidiaries in FY24 alone. VRL used loans from VEDL subsidiaries to purchase VEDL stock on-market, but over $122 million of VEDL loans were 'written off' in a blatant violation of the Companies Act, it said. The 87-page Viceroy Research report accused VRL of draining VEDL, forcing it to take on more debt and deplete its cash reserves, impaired creditors' ability to recover their principal, a situation that resembled a 'Ponzi scheme', it said. VEDL promoted capital-intensive projects that it could not afford to raise fresh capital, which was paid out to VRL, it alleged. Other allegations included inflated asset values of VEDL's subsidiaries, capex fraud, expenses being kept off-balance sheet, and governance failure. Shares of Vedanta and Hindustan Zinc slipped 3% each to ₹441 and ₹425 on Wednesday. Vedanta denies Vedanta Group dismissed Viceroy Research report as 'a malicious combination of selective misinformation and baseless allegations to discredit the group'. The release of the Viceroy report came just a day before VEDL's annual general meeting (AGM). Terming the report 'false propaganda', the company said, 'The timing of the report is suspect and could be to undermine the forthcoming corporate initiatives. Our stakeholders are discerning enough to understand such tactics.' The group further noted that the report's authors had included extensive disclaimers stating that the content was educational and opinion-based, and not factual, it said. The Viceroy Research is the second attack on the Vedanta Group. In 2018, VRL was delisted from the LSE amid protests outside its final annual general meeting. (The writer is with The Hindu businessline)
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Business Standard
6 days ago
- Business
- Business Standard
Vedanta shares fall 3.38% after Viceroy alleges group-wide misconduct
Anil Agarwal-owned firm denies Viceroy Research's allegations of a Ponzi-like structure, calling them a malicious attempt to discredit the group and derail future plans Mumbai Shares of Vedanta Ltd, the Indian metals-to-mining giant, fell 3.38 per cent on the stock exchanges on Wednesday after the US-based short-seller Viceroy Research released a scathing report accusing its London-based parent, Vedanta Resources, of orchestrating a 'Ponzi-like' structure and alleging group-wide financial misconduct, accounting fraud, and looming insolvency risks. In a detailed 87-page forensic report, Viceroy — which disclosed a short position in Anil Agarwal-owned Vedanta Resources' debt — described the group as a "financial zombie" reliant on extracting unsustainable cash flows from Vedanta Ltd to service mounting debt at the parent level. The report alleges that Vedanta Ltd's own balance sheet is being hollowed out through massive leverage, accounting trickery, and cash transfers masked as brand fees and inter-company loans. Apart from Vedanta, shares of Vedanta Ltd's subsidiary Hindustan Zinc also fell by 2.56 per cent to Rs 425 a share (see chart). The spokesperson said the timing of the report is suspect and could be intended to undermine forthcoming corporate initiatives. 'Our stakeholders are discerning enough to understand such tactics. In fact, to avoid any responsibility, the authors of the report have included disclaimers stating the report is for educational purposes and merely expresses opinions, not facts,' the spokesperson said, adding that the group remains focused on business and growth. The Viceroy Research report, reminiscent of a similar attack on the Adani group by now-defunct Hindenburg Research in 2023, says the core of its investment thesis rests on a simple but critical dynamic: Vedanta Resources Ltd (VRL) is a "parasite" holding company with no significant operations of its own, propped up entirely by cash extracted from its dying "host": Vedanta Ltd. To service its own debt burden, VRL is systematically draining the Indian listed entity, forcing the operating company to take on ever-increasing leverage and deplete its cash reserves. 'This looting erodes the fundamental value of Vedanta Ltd, which constitutes the primary collateral for VRL's own creditors,' the report said. 'Consequently, VRL's actions to meet its short-term obligations directly impair its creditors' long-term ability to recover their principal, a situation that resembles a Ponzi scheme where Vedanta Ltd stakeholders, which include VRL creditors, are the 'suckers',' the report said. Viceroy Research was founded by Fraser Perring, who was an early critic of the fraudulent German payments company Wirecard AG. The firm has previously targeted large companies such as industrial software group Hexagon AB. Notably, Viceroy was fined by South Africa's regulator in 2021. The report said this arrangement has pushed the entire group to the brink of insolvency, propped up only by a continuous cycle of new debt, accounting tricks, and the deferral of massive, undisclosed liabilities. 'New credit lines serve only to destroy the PropCo's only collateral, staving off immediate insolvency at the expense of any chance of creditors recovering principal. The mechanisms used to maintain the illusion of stability are failing, and a group-wide insolvency event is no longer a distant risk,' it said, adding that the group's proposed demerger plan will spread liabilities across weaker entities, exacerbating financial fragility rather than resolving it.
Hans India
6 days ago
- Business
- Hans India
Vedanta shares fall after US short-seller alleges discrepancies in finances; firm says baseless
Mumbai: Vedanta shares fell over 7 per cent during intra-day trading on Wednesday after a report by US short-seller Viceroy Research alleged that the conglomerate resembled a 'Ponzi' scheme -- a claim that Anil Agarwal-owned company has vehemently denied. "The entire group structure is financially unsustainable, operationally compromised, and poses a severe, under-appreciated risk to creditors," according to the short-seller report. According to the US-based short seller, Vedanta Resources Ltd. is a holding company that relies on collecting money from Vedanta Ltd. to pay its debts because it doesn't have any significant operations of its own. This has weakened the value of the group's main collateral by forcing Vedanta to take on more debt and deplete reserves, the report stated. Based on data available on the BSE, the promoter holding in Vedanta as of March is 56.38 per cent. 'Vedanta Resources' actions to meet its short-term obligations directly impair its creditors' long-term ability to recover their principal,' the report said, adding that the situation resembled a 'Ponzi' scheme. The Viceroy claimed that in order to stay solvent, the group had deferred significant undisclosed liabilities and depended on new debt and accounting changes. It cautioned that the possibility of a group-wide insolvency event was no longer remote. The report was released before the annual general meeting (AGM) of Vedanta on Thursday. In a statement, Vedanta Group dismissed the short-seller report, calling it a 'malicious combination of selective misinformation and baseless allegations' aimed at discrediting the group. The company said the report was released without any attempt to seek a response from Vedanta and alleged it was created solely to trigger false market sentiment. It claimed the report contains only a compilation of publicly available information, which has been taken out of context and presented in a misleading way to profit from the resulting reaction. 'The timing of the report is suspect and could be to undermine the forthcoming corporate initiatives,' a Vedanta Group spokesperson said in a statement. 'Our stakeholders are discerning enough to understand such tactics.' Meanwhile, after starting the session in green at Rs 461.0 against the previous session's closing of Rs 456.30 on NSE, the scrip fell over 7 per cent to hit an intraday low at Rs 420.65 as selling pressure escalated over the Viceroy allegations. At around 13.55, the stock was trading at Rs 439.95, down 3.58 per cent, recovering some of its losses. Shares of Hindustan Zinc, a subsidiary of Vedanta Group, fell over 3 per cent during the early trading. The stock opened at Rs 437.30, up against the last closing price of Rs 436.20 on NSE. It dragged into negative territory post the Viceroy Research allegation, touching an intraday low at Rs 415.15. At around 2:13 pm, the shares were trading at Rs 425.15, down 2.53 per cent or Rs 11.05.
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Business Standard
6 days ago
- Business
- Business Standard
Who is Viceroy Research? The short-seller targeting Vedanta's parent
Vedanta share price: The New York-based investigative financial research Viceroy Research is in focus for its allegations and shorting of debt stack of Indiam billionaire Anil Agarwal-owned Vedanta Resources. The short-seller alleged that the parent of India-listed Vedanta Ltd. "poses a severe, under-appreciated risk to creditors," and "resembles a Ponzi scheme". The 87-page report, which was released on Wednesday, said its investigation has uncovered material quantitative and qualitative discrepancies in the Vedanta group companies' operations. Bait and switch funding model, inflated asset values, capex fraud and governance failure are some of the discrepancies that the short-seller alleges. To cure its maladies, Vedanta Resources has proposed a demerger of the entities it has rolled up through its decades-long acquisition strategy, it added. Vedanta Group, however, dismissed the "baseless" report, saying it's a malicious combination of selective misinformation. It alleged that the short seller was looking to "discredit" the group. As per the data from stock exchanges, the promoter holding via various companies in Vedanta is 56.38 per cent as of March. It is to be noted that most of the shares held by the promoters are pledged to their creditors. Who is Viceroy Research? Viceroy Research LLC is an investigative financial research group registered in Delaware, USA, as per its website. Fraser John Perring, with Australian partners Aiden Lau and Gabriel Bernarde, formed the firm in 2016. "Our mission is to sift fact from fiction and encourage greater management accountability through transparency in reporting and disclosure by public companies and overall improve the quality of global capital markets," it said in the report. More recently, Tokyo-based Abalance was its target in 2023 for circumventing US duties. Earlier, the short seller went after the UK's Home REIT Plc, alleging about the financial health and governance of the UK social housing landlord. It shorted Truecaller in 2022 for intentionally misdirecting valid criticism, and published a report on the technology giant Advanced Micro Devices Inc. in 2018, expanding on the financial impact of the CTS Labs vulnerabilities. Viceroy Research also made headlines when it placed bet against companies like Elon Musk-owned Tesla. From Nasdaq-listed Athenex to Frankfurt Stock Exchange-listed Steinhoff, the short-seller has come up with reports on 29 companies, as per their website. The recent report on Vedanta parent's although listed on the London Stock Exchange, will have an impact in India given that its subsidiary is listed on the Indian stock exchange. Shares of Vedanta tanked up to 8 per cent in Wednesday's intra-day trade on the BSE amid heavy volumes, after the report. That said, reports suggest that Medical Properties Trust, an Alabama-based real estate investment trust, won a preliminary case in its defamation lawsuit against the short seller. It has also been fined by the South African FSCA for false and misleading statements about 'Capitec'.
