Is Vedanta Semiconductors a ‘Sham’ Commodities Trading Operation?
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Synopsis
Viceroy Research's report calls out Vedanta Semiconductors as a deceptive trading operation, claiming it's a strategic move to evade NBFC classification. Allegations suggest a liquidity crisis prompted this maneuver, while Vedanta refutes all claims as unfounded.
Key Takeaways
- Viceroy Research claims Vedanta Semiconductors is a sham operation.
- The operation allegedly aims to evade NBFC classification.
- Vedanta denies all allegations, asserting they are baseless.
- The report suggests a liquidity crisis prompted these maneuvers.
- Regulatory scrutiny may intensify as these claims unfold.
New Delhi, July 19 (NationPress) In a new critique aimed at the Anil Agarwal-led Vedanta Group, the US-based short-seller firm Viceroy Research has claimed in its latest analysis that Vedanta Semiconductors is merely a ‘sham’ commodities trading entity crafted to improperly sidestep being classified as a non-banking financial company (NBFC).
Viceroy asserts, “We believe that the subsidiary of Vedanta Limited (VEDL), Vedanta Semiconductors Private Limited (VSPL), is a deceptive commodities trading operation established to illegitimately evade classification as an NBFC.”
In a report released on Friday (US time), the short-seller accused the company of creating this scheme to “aid VEDL’s remittance of brand fees to Vedanta Resource’s (VRL) in April 2025, during a critical liquidity crisis.”
“The operational facade of VSPL necessitates a 24-month regulatory silence to serve its purpose, allowing it to repay offshore lenders and mask the near-catastrophe of April 2024. While credit analysts seem oblivious to the warning signs, India’s regulators are traditionally alert,” the report claimed.
The American short seller has been releasing a series of reports on the Vedanta Group recently, alleging that Vedanta Resources, the holding entity of Vedanta, is entirely dependent on cash generated from its operational unit.
Vedanta has vehemently denied all accusations, labeling them as ‘baseless’.
In the most recent report, Viceroy stated that in April 2024, Vedanta Limited (VEDL) encountered a significant liquidity crisis.
“In response, VEDL revived VSPL, not as a semiconductor enterprise, but as a zero-margin trading firm whose activities appear to solely involve paper-based commodity trading,” the report alleged.
“VSPL engaged offshore lenders for a short-term, INR-denominated, 10 percent NCDs secured by VEDL’s stake in HZL (equivalent to 1 percent of outstanding shares). VSPL subsequently commenced trading commodities (copper, silver, gold) on a zero-margin basis, reminiscent of wash trading. It remitted the loan to VEDL as a 24-month, 12 percent loan, with the margin intended to cover the costs of this sham operation,” Viceroy Research stated in its report.
“VSPL, which superficially appears as an operational entity, would encounter reduced scrutiny for loan repayments under FEMA, Companies Act, PMLA, and AML frameworks. VSPL will likely have to sustain these fraudulent operations until FY27, when the loans mature, and repayments will have to be routed back through it. If regulators intervene at VSPL at any point, the lending group may face total ruin,” it further alleged.
Earlier this week, Viceroy Research made new allegations against the Vedanta Group, accusing the company’s promoters of maintaining an undisclosed stake through a welfare trust to recycle funds. The company in question is PTC Cables Pvt. Ltd (PTCC), which possesses a 1.91 percent stake in Vedanta Ltd, valued at Rs 1.75 lakh crore.
PTCC is controlled by Bhadram Janhit Shalika Trust (BJST), which Viceroy claims is managed by the Agarwal family, the founders of the Vedanta Group. Nonetheless, the Vedanta Group has dismissed these allegations as “baseless.”
Point of View
It's crucial to present an unbiased perspective. The recent claims by Viceroy Research against Vedanta Group raise significant questions about corporate governance and regulatory compliance. While Vedanta asserts these allegations are baseless, the implications of such accusations warrant public scrutiny to uphold transparency in the financial sector.
NationPress
19/07/2025
Frequently Asked Questions
What is the main accusation against Vedanta Semiconductors?
Viceroy Research alleges that Vedanta Semiconductors is a 'sham' operation intended to evade classification as a non-banking financial company (NBFC).
How has Vedanta responded to these allegations?
Vedanta has categorically denied the allegations, calling them 'baseless'.
What are the implications of these allegations?
If proven true, the allegations could suggest serious regulatory evasion and financial mismanagement within Vedanta.
Who is Viceroy Research?
Viceroy Research is a US-based short-seller firm known for scrutinizing companies and publishing critical reports.
What is the significance of the liquidity crisis mentioned?
The liquidity crisis faced by Vedanta Limited in April 2024 is central to the allegations, suggesting financial instability within the company.
