Viceroy Calls Vedanta Chip Unit A Sham; Vedanta Mulls Legal Action

US-based Viceroy Research LLC on Friday alleged that Vedanta Ltd.'s wholly-owned unit, Vedanta Semiconductor Pvt. Ltd., is essentially a “sham commodities trading operation” created to channel funds to its parent, Vedanta Resources Ltd., during a liquidity crisis.

In a detailed report, the short-seller claimed Vedanta devised a scheme in April to remit brand fees to its UK-based parent. As part of the plan, the semiconductor unit raised ₹24.54 billion through a short-term rupee-denominated NCD issue in May, secured against 1% of Vedanta’s stake in Hindustan Zinc Ltd. The funds were then allegedly transferred to Vedanta Resources via a ₹24.08 billion, 24-month loan at 12%, Viceroy said.

The report also claimed Vedanta Semiconductor began trading commodities like copper, silver, and gold on a zero-margin basis, describing it as activity “reminiscent of wash trading.” The research firm alleged the setup helped the unit appear operational, thus avoiding scrutiny under FEMA, the Companies Act, and anti-money laundering rules.

Vedanta has not directly responded to the claims in the report but said late Friday it had sought an independent legal opinion from former Chief Justice D.Y. Chandrachud. According to the opinion, Viceroy’s statements met the threshold for both civil and criminal defamation. Viceroy had issued earlier reports this month with other allegations against the group.