The directorate of enforcement (ED) has initiated an investigation into alleged violations of the Foreign Exchange Management Act (FEMA) by mining and metals conglomerate Vedanta group and has conducted searches at premises linked to the company as part of a probe into brand fee payments made by group entities to their parent company, media reports say.
According to the reports, the searches began on Monday and covered locations in Delhi, Mumbai and Rajasthan. The operation has since concluded, with investigators collecting financial records, agreements and other documents related to the transactions under examination.
Officials were quoted by the media as saying that the probe is being conducted under the provisions of FEMA. The agency is scrutinising payments allegedly made by Vedanta group entities for brand usage and examining whether such transactions complied with applicable foreign exchange regulations.
Documents and records gathered during the searches would now be analysed before the agency decides on its next course of action, reports say. ED has not yet issued an official statement regarding the searches.
Responding to the development, a Vedanta spokesperson said the company was fully cooperating with the authorities.
"We are extending full cooperation to the authorities and are providing all information sought. The company remains committed to compliance with all applicable laws and regulations,"
the spokesperson told IANS.
Brand Fee Arrangements Have Drawn Scrutiny
ED's probe comes amid growing scrutiny of brand fee payments made by Vedanta subsidiaries to the parent company, Vedanta Resources Ltd (VRL).
In September 2025, US-based short-seller Viceroy Research LLC raised concerns about Vedanta's corporate governance practices, alleging that annual brand fee payments exceeding ₹2,000 crore constituted material related-party transactions that required prior approval from disinterested shareholders under Securities and Exchange Board of India (SEBI) regulations and the Companies Act.
According to a legal opinion cited by Viceroy, payments for brand usage and royalty crossing prescribed thresholds should have been placed before shareholders for approval. The report argued that the transactions breached the ₹1,000 crore threshold for material related-party transactions and may also have triggered additional requirements applicable to brand usage arrangements.
Viceroy claimed the payments represented a serious corporate governance concern and called for greater disclosure of agreements between Vedanta and its parent company. It also suggested that minority shareholders could seek suspension of such payments and recovery of amounts already remitted.
Separately, Mumbai-based shareholder and investor activist Girish Mittal approached the Supreme Court through an intervention application in a public interest litigation (PIL), challenging what he described as excessive and opaque brand fee arrangements.
Mr Mittal alleged that Vedanta Resources charged its Indian subsidiaries brand fees that could reach as much as US$500mn (million) or about ₹4,100 crore, during FY25-26. He argued that such payments adversely affected shareholder value and effectively transferred cash from Indian operating companies to the parent entity.
According to his application, the fees lacked adequate commercial justification and raised concerns regarding corporate governance, minority shareholder rights, and regulatory oversight.
Hindustan Zinc Payments Also Came under Spotlight
The controversy intensified after reports highlighted payments made by Hindustan Zinc Ltd (HZL), a listed Vedanta subsidiary.
The report further claimed that between FY22-23 and FY24-25, HZL paid about ₹1,562 crore in brand fees, which were subsequently transferred upstream within the group structure. Viceroy described the arrangement as a mechanism for transferring cash from listed Indian entities to the parent company.
Separate Setback from Supreme Court
The ED action comes weeks after Vedanta informed stock exchanges that the Supreme Court had ruled against its subsidiary, Talwandi Sabo Power Ltd (TSPL), in a dispute over alleged misdeclaration of power availability.
For now, the focus remains on the FEMA investigation, with enforcement officials examining the documents seized during the searches to determine whether the brand fee payments and related transactions complied with India's foreign exchange regulations. Further details are expected once the agency completes its review of the records collected during the operation.
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