Vedanta shares continued to fall on July 10. This was the second day of losses after US-based short-seller Viceroy Research made serious claims against Vedanta’s parent company, Vedanta Resources. The firm compared the group’s operations to a “Ponzi scheme”, sending shockwaves across the market.
At 11:34 am, Vedanta share price was down 1.5%, trading around Rs 434.30. On July 9, the stock had already crashed over 8% intraday before recovering slightly to close 3% lower.
The sharp drop came after Viceroy Research said it had taken a short position on Vedanta’s debt. In its report, the short-seller called Vedanta Resources a “parasite holding company” that survives only by draining cash from its Indian arm, Vedanta Limited.
The report stated:
“Vedanta Resources is only staying alive by sucking money from Vedanta Limited. It has no real business of its own. This looks like a Ponzi scheme.”
It even said that Hindustan Zinc, one of Vedanta’s most valuable companies, was also being looted through related-party deals and strange brand fees.
But Vedanta hit back. The company issued a strong statement denying all the claims. It said the report was full of “baseless allegations and selective facts.” Vedanta claimed that Viceroy had not even tried to contact them before releasing the report.
“This is a malicious attack. It’s only meant to spread false news and shake market confidence,” said the company in a stock exchange filing.
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Anil Agarwal to Speak at AGM Today
All eyes are now on Vedanta’s Annual General Meeting (AGM), which is happening today. Investors are waiting to hear what Anil Agarwal, the company’s chairman, will say. His speech might directly address the short-seller’s allegations.
Meanwhile, Hindustan Zinc shares also continued to fall. Investors fear that the company’s profits might be hurt by these alleged insider dealings.
There’s more. Bloomberg reported that Chris Griffith, CEO of Vedanta’s base metals business, has left the group. He was managing Vedanta’s assets in South Africa and Namibia. This sudden exit added more tension to the ongoing drama.
Still, not everyone agrees with the short-seller’s claims. Rakesh Arora from Go India Advisors said on CNBC-TV18 that Vedanta’s debt is not a big problem. He pointed out that lenders had approved the company’s demerger plan, which wouldn’t happen if debt was an issue.
“Viceroy is late. Vedanta has already improved a lot in the last 2-3 years. Things are only going to get better,” he said.
For now, the market waits. Will Anil Agarwal calm the storm or add fuel to the fire?
Disclaimer:
This article is for informational purposes only and is not financial advice. Please consult a certified advisor before making investment decisions.
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