New Delhi: Shares of Vedanta Ltd closed over 3 per cent lower on Wednesday after US short seller Viceroy Research released a report alleging that billionaire Anil Agarwal’s mining conglomerate is “financially unsustainable” and poses a severe risk to creditors. Vedanta dismissed the claims as “selective misinformation and baseless,” calling them an attempt to discredit the group.
The stock tanked 7.71 per cent to Rs 421 in intra-day trade on the BSE. Later, it recovered most of the lost ground and ended at Rs 440.80, down 3.38 per cent.
On the NSE, the stock ended 3.28 per cent down at Rs 441.30 after dropping 7.81 per cent to Rs 420.65 in intra-day.
The company’s market valuation eroded by Rs 6,021.99 crore to Rs 1,72,369.91 crore.
Viceroy said it was shorting the debt stack of Vedanta Resources, the parent company and majority owner of Mumbai-listed Vedanta Ltd, as it released the 85-page report.
Shorting debt, also known as short selling of bonds, is a trading strategy where an investor looks to profit from a decline in the price of bonds or other debt instruments. It involves borrowing the bond, selling it at the current market price, and then buying it back later at a potentially lower price to return to the lender, pocketing the difference as profit. Calling Vedanta Resources Ltd (VRL) a “heavily indebted parent”, Viceroy said, “The entire group structure is financially unsustainable, operationally compromised, and poses a severe, under-appreciated risk to creditors”. Responding to the report, Vedanta in a statement said, “The report is a malicious combination of selective misinformation and baseless allegations to discredit the 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 the public domain, but the authors have tried to sensationalise the context to profiteer from market reaction,” it said.
“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,” Vedanta said. “In fact, to avoid any responsibility, authors of the report have added various disclaimers that the Report has been prepared for educational purposes only and expresses their opinions and are not statements of fact.” Vedanta said it remains focused on the business and growth, and requested everyone to avoid speculation and unsubstantiated allegations.With agency inputs