Brief Summary
This video discusses recent allegations against Vedanta and Hindustan Zinc by Viceroy Research, an American short seller firm, and their potential impact. It also covers Vedanta's positive developments, including a dividend payout that surpasses Ambani and Adani, and preparations for Q1 results following a certificate from KFin Technology. The video touches upon the upcoming demerger of Vedanta into five separate entities and its potential benefits for shareholders.
- Viceroy Research alleges financial misconduct by Vedanta and Hindustan Zinc.
- Vedanta's dividend payout outperforms Ambani and Adani.
- Vedanta prepares for Q1 results after receiving a certificate from KFin Technology.
- Demerger of Vedanta into five entities is expected to benefit shareholders.
Introduction: Viceroy Research Allegations Against Vedanta and Hindustan Zinc
Viceroy Research, an American short seller firm, has targeted Vedanta with serious allegations, particularly against Hindustan Zinc. These allegations suggest potential defaults and financial misconduct, including a brand fee agreement without government approval. Despite these allegations, the stock prices of both Hindustan Zinc and Vedanta have not significantly declined, indicating that investors may not be taking the claims seriously.
Details of the Allegations
The allegations stem from a brand fee imposed by Vedanta on Hindustan Zinc in October 2022, which Viceroy Research claims was done without the necessary approval from the Central Government, violating a 2002 shareholder agreement. This agreement was established when Vedanta acquired a stake in Hindustan Zinc from the government. Viceroy Research argues that the brand fee is not commercially fair and could jeopardize the government's 27.92% stake in Hindustan Zinc, where Vedanta holds a 61.84% stake. The report suggests that such agreements undermine the company's transparency and legal standing with the government.
Potential Consequences and Government Options
If the alleged breach is proven, Vedanta may need to provide a solution within 15 days. Failure to do so could allow the government to exercise its call option, potentially buying Vedanta's stake in Hindustan Zinc at a 25% discount or forcing Vedanta to buy the government's stake at a 25% premium. Viceroy Research likens Vedanta's operating style to a Ponzi scheme, accusing the company of benefiting its other entities through insider financial transactions. The Government of India, as a major minority shareholder, may take legal action if the allegations are substantiated, including filing a complaint with SEBI, reviewing the shareholder agreement, and seeking clarification from Vedanta.
Vedanta's Dividend Earnings
In 2025, Anil Agarwal, chairman of Vedanta, has surpassed Ambani and Adani in dividend earnings, securing the second position in India with ₹9591 crores. This achievement is attributed to Vedanta's distribution of ₹179 crore in dividends. Shiv Nadar of HCL Technology leads with ₹92 crores in earnings, while Azim Premji of Wipro follows Agarwal with ₹4570 crores.
Vedanta's Q1 Preparations and Demerger
Vedanta has completed preparations for its Q1 results, having received a certificate from KFin Technology, its share transfer agent, confirming that all share-related issues have been resolved. Additionally, Vedanta is set to undergo a demerger, dividing the company into five parts. Shareholders will receive five shares in total, potentially improving their financial position as each entity operates independently, offering opportunities for increased profits.
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