The Mumbai-based Vedanta Group has dismissed a report released by New York-based short-seller Viceroy Research LLC on Wednesday as “baseless”, adding that “it’s a malicious combination of selective misinformation” intended to “discredit” the Vedanta Group.
“The report is a malicious combination of selective misinformation and baseless allegations to discredit the Vedanta Group. It has been issued without making any attempt to contact us with the sole objective of creating false propaganda. It only contains a compilation of various information–which is already in public domain, but the authors have tried to sensationalise its context to profit from market reaction,” according to Vedanta’s official statement issued on Wednesday.
“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. In fact, to avoid any responsibility, authors of Viceroy’s report have added various disclaimers that the report has been prepared for educational purposes only, expresses their opinions and are not statements of fact (on page 7 of the report). We remain focused on the business and growth, and request everyone to avoid speculation and unsubstantiated allegations,” Vedanta’s statement mentioned, dismissing Viceroy’s report.
Viceroy Research LLC is a short-seller registered in Delaware, USA, according to its official website.
“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,” Viceroy Research LLC stated in its report.
Viceroy alleged in its 87-page report that the parent of India-listed Vedanta Ltd “poses a severe, under-appreciated risk to creditors, and resembles a Ponzi scheme”.
The short-seller claimed that its investigation has uncovered material quantitative and qualitative discrepancies in the operations of Vedanta Group companies. “Bait and switch funding model, inflated asset values, capex fraud and governance failure” are some of the discrepancies, Viceroy’s report alleged.
According to Viceroy’s report, “Vedanta Resources is a financial zombie being kept alive by transfusions of cash from its subsidiary. The short thesis is not death by a thousand cuts–any one of the multitude of risks we outline is sufficient to topple Vedanta’s already fragile, Ponzi-like structure. To cure its maladies, Vedanta Resources has proposed a demerger of the entities it has rolled up, through its decades-long acquisition strategy”.