The new Viceroy report on Vedanta is honestly scary. Vedanta Resources Ltd (VRL), the parent of Vedanta Limited, is being accused of running something very close to a Ponzi scheme.
Message from the report:
VRL doesn’t run any business. It stays alive by taking money from Vedanta Limited.
To pay VRL’s huge debt, Vedanta Limited is borrowing more, using up its savings, and slowly draining itself.
The only security for VRL’s loans is Vedanta Limited. If Vedanta goes down, everyone who gave money to VRL could lose it too.
The report also says the group is inflating asset values, pretending profits by shifting expenses, and hiding big amounts of money off the books.
There’s also a claim of project fraud. They announce big new projects, raise money, and then move that money to pay old loans.
Now they want to break the company into smaller parts. But those new parts will also start with a lot of debt.
Viceroy Research is a U.S.-based short-seller known for publishing explosive reports that shake up markets. They’ve gone after big names like Wirecard, Steinhoff, and now, Vedanta.
If any of this is true, it could become one of India’s biggest financial disasters.
I just went through this report on Vedanta (VEDL) and I’m honestly stunned. This isn’t just another overleveraged company, it’s a financial time bomb. If you remember how fast Adani stocks collapsed after the Hindenburg report, this has the same energy. I’m not waiting around this time—I’m out.
Not surprised at all. Just kept on investing based on dividend yield prior to Corona.
The true nature of the owner came out when he tried to delist at the peak of corona. Thousands of retail investors including me, lost money
This group taught me one important lesson to read about management integrity before investing. I thought all this management thing was in theory…
Mohnish Pabrai in one of the interview said, check last 10 years financials for the Chairman report, read it, and see whatever he said in one year has happened in the next year and so and so forth…
Investors and regulators seem to need this kind of push to realize how bad this company is doing, actually we need to read to full report to know that there are still things hidden in the past. People should act now
We need to take time to read the full report, and then you will find out
except for the dirty facts that people were already aware of, there are more to accuse:
Why is subsidiaries paying significant “brand fees” and other charges to VRL, a non-operating parent company in the UK? What services are actually being provided in return? Nothing!
They tried to park their international zinc business into Hindustan zinc…
Government of India stopped this transaction.
Quote
In a setback to billionaire Anil Agarwal’s mining group, the government has opposed Vedanta Ltd’s proposal to sell its international zinc business to Hindustan Zinc Ltd for $2.98 billion over concerns of valuation.
The government has threatened to take legal action to stop the sale of the Africa-based assets to HZL, in which it holds a 29.54 per cent stake.
I have exited my long position in both Vedanta and Hindustan Zinc, won’t take the risk! I learned my lessons before. Again, not all accusations in the report has been know in the past. And the company response to the short seller is very worrying, they are not answering anything.
I’m not Indian
Just giving my opinions. Not just me, others experienced similar losses during volatility events like this. In a few days or weeks it may bounce back or drop more, who knows? Personally I am not a risk taker.
