Shares of Vedanta and Hindustan Zinc witnessed sharp movements after short-seller Viceroy Research alleged the group’s structure resembled a “Ponzi-like scheme.” The group has strongly denied the accusations, calling them misleading and malicious.
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Stock Turmoil for Vedanta and Hindustan Zinc
On July 9, shares of Vedanta Ltd and Hindustan Zinc saw increased volatility after Viceroy Research, a U.S.-based short-selling firm, accused the corporate structure of the Vedanta Group of being “Ponzi-like.” The report triggered a negative reaction in early trading, with stock prices slumping as much as 8%.
Viceroy Research’s Allegations
The Viceroy report alleged that Vedanta’s parent entity, Vedanta Resources Ltd (VRL), was deeply leveraged and dependent on high-interest loans, dividends, and intra-group transactions. According to the report, this raised “red flags” about sustainability, comparing the structure to a “classic Ponzi scheme.” The allegations caused concern among investors, leading to a sell-off in early market hours.
Vedanta Group’s Response
In swift retaliation, the Vedanta Group issued an official statement, firmly rejecting the claims. The conglomerate clarified that all financial dealings were transparent, audited, and in line with regulatory compliance. The statement called the report “baseless, mischievous, and misleading,” asserting that the group remains committed to financial integrity and shareholder interests.
Following the denial, both Vedanta and Hindustan Zinc shares rebounded and turned green by the end of the trading session, showcasing investor confidence in the group’s clarification.
Investor Reaction and Market Outlook
Despite the sharp dip and quick recovery, the incident has once again brought the spotlight on corporate governance and financial structuring within Indian conglomerates. Market analysts noted that while short-seller reports can influence short-term sentiment, long-term value remains tied to fundamentals.
Investors are now watching the group’s next earnings reports, dividend declarations, and debt restructuring plans closely for signs of financial stability.
