A new report by US-based short seller Viceroy Research has brought the spotlight back onto Vedanta Limited’s semiconductor ambitions, raising serious questions about the business practices of its subsidiary, Vedanta Semiconductors Private Limited (VSPL). According to the Viceroy report, what was presented to the public and investors as a move into the semiconductor sector is, in reality, a paper-based trading operation designed to skirt regulatory scrutiny and manage a liquidity crisis.
The report asserts that VSPL, incorporated in early 2022 amid much fanfare and with high-profile joint venture announcements involving Foxconn, has been functioning not as a semiconductor manufacturer but as a zero-margin commodities trader. Viceroy claims there is a complete lack of evidence of any meaningful investments in semiconductor manufacturing—no infrastructure, R&D spend, or fixed assets are present in financial filings. Instead, VSPL’s declared revenues for FY25, amounting to around ₹416 crore, stem entirely from commodity sales in copper, gold, and silver. There is no record of manufacturing activity or export-import data to back up its stated business model.
The short seller alleges that these trading activities are artificially created to provide an operational facade, allowing Vedanta to avoid being classified as a Non-Banking Financial Company (NBFC). Such classification would subject the entity to stricter disclosure and compliance requirements under Indian law, something the Viceroy report suggests Vedanta sought to bypass.
Liquidity Management and Offshore Lending Links Scrutinized:
The ₹2,500 crore loan that VSPL provided to Vedanta in April 2024 during a time of severe economic hardship is at the center of the problem. According to the report, VSPL subscribed for 10% non-convertible debentures in order to raise money from a group of international firms. The funds were supplied by these offshore lenders, which included well-known firms including JP Morgan, Fort Canning Investments, and Bank of America’s Singapore branch. The funds were subsequently transferred to Vedanta Limited as a 24-month loan. Viceroy claims that by utilizing VSPL as a middleman, the loan’s structure allowed Vedanta to transfer an enormous amount of money abroad without being subject to strict monitoring.
The collateral and interest terms of the loan seem to differ between Vedanta Limited’s and VSPL’s disclosures. Hindustan Zinc (HZL) shares, hypothecated properties, and all of VSPL are listed as the collateral base in one filing, but only the HZL shares are mentioned in another. Concerns over transparency are further heightened by the fact that the loan’s reported interest rates range from 10.4% to 10.7% to 12%.
According to Viceroy, the group may face a “wipeout” if Indian regulators decide to step in before FY27, as this short-term arrangement requires 24 months of “regulatory silence” before the underlying liquidity move can be reversed.
Claims Beyond the Semiconductor’s Exterior:
Viceroy Research’s latest assessment goes further, arguing that the entire VSPL operation was never intended to build a semiconductor business but rather to provide temporary liquidity cover during a turbulent financial phase. The report accuses Vedanta Group promoters of using related-party structures and welfare trusts to recycle funds internally through private vehicles such as PTC Cables Pvt Ltd (PTCC), which holds a substantial stake in Vedanta Ltd. This, according to Viceroy, points to a broader pattern where group entities are used to mask actual end ownership and facilitate internal fund flows.
The critical tenor of the reports is that Vedanta’s highly publicised semiconductor venture—with ambitious investment figures and partnerships—was a narrative constructed more for capital raising and market perception than for industrial implementation. The project with Foxconn, once valued at $19.5 billion, eventually unraveled, with Foxconn exiting in July 2023 amid unresolved disputes and stalled progress. Despite this, Vedanta continued to represent the semiconductor initiative as an active business, something the report views as misleading for investors and regulators alike.
Vedanta’s Response: Denial of All Allegations
Vedanta Limited has strongly refuted all claims made by Viceroy Research. The company asserted that each step in the VSPL’s business, including the structuring and disclosure of loans, has fully complied with statutory requirements. Vedanta maintained that all business activities of VSPL are legitimate, transparent, and meet regulatory and governance standards, with accurate reporting of terms, interest rates, and collateral.
Vedanta’s official statement labelled the Viceroy allegations as “baseless” and reiterated its adherence to Indian law and corporate disclosure norms. The company highlighted that its financial relationships and transactions through VSPL were in line with best practices and designed to meet liquidity requirements transparently.
As scrutiny of the group’s financial arrangements deepens, the contrasting narratives of a global investor-driven narrative versus on-ground operational realities are likely to keep industry watchers and regulators attentive in coming quarters. The Viceroy report’s impact is already being felt in the market as debates on governance, transparency, and investor protection intensify around one of India’s most high-profile corporate names.
