In a damning letter to Reserve Bank of India (RBI), US-based investigative firm Viceroy Research has accused Vedanta Resources Ltd (VRL) of siphoning off over Rs81,000 crore (US$9.5bn-billion) from its Indian subsidiaries through complex financial manoeuvres, debt-fuelled dividends and dubious brand fees, posing what it called a 'systemic threat to India’s financial sovereignty'. Separately, Vedanta failed to inform exchanges about the difference in hearing at the national company law appellate tribunal (NCLAT) of its unit Talwandi Sobo Power Ltd (TSPL),
Viceroy alleges in a post on X.
The explosive revelations were made public on Wednesday after Viceroy’s formal submission to RBI on 15 July 2025 reportedly went unanswered. Viceroy says it is releasing the document 'in the interest of transparency and public accountability', citing growing concern over unauthorised foreign exchange remittances, regulatory arbitrage, and 'capital flight' cloaked in legal grey zones.
“What truly threatens India’s financial sovereignty is the silent, sustained siphoning of its capital to offshore creditors,” Viceroy wrote in the letter to RBI's chief vigilance officer N Sara Rajendra Kumar.
According to Viceroy, between FY21-22 and FY25-26, Vedanta Ltd (VEDL) and its subsidiaries have transferred over Rs12,820 crore (about US$1.5bn) in so-called 'brand and strategic services' fees to parent company VRL. These fees, it says, were unjustified, not benchmarked and appeared to function as prepaid loans tied to VRL’s own rising borrowing costs.
“These brand fees are not provided from London offices of VRL—many of which are vacant or for lease—but by employees already on VEDL’s payroll,” Viceroy claimed.
The letter compared this to Tata Steel, where brand fees are capped at Rs200 crore annually, indicating Vedanta’s arrangements were wildly disproportionate and detrimental to Indian shareholders.
From FY21-22 to FY24-25, VEDL reportedly paid out Rs68,372 crore (US$8bn) in dividends, exceeding its free cash flow by over Rs47,924 crore or about US$5.6bn. These payouts, Viceroy alleges, were not driven by operational performance, but borrowed domestically to service VRL’s foreign debt.
Viceroy Research notes a dangerous feedback loop: VEDL borrows more to sustain these dividends, sells assets and weakens its own balance sheet, all while foreign creditors benefit. During the same period, VEDL’s net debt rose by US$6.7bn and its cash position declined by US$2.1bn, Viceroy says.
Viceroy highlights a US$956mn (million) or around Rs8,171 crore loan from VEDL to VRL-linked entities, structured in 2020 without security. Of this, US$417mn or Rs3,564 crore remains outstanding. The loan, the report claims, was restructured multiple times, partially repaid via offshore intercompany transfers, and eventually linked to a Rs2,750 crore or about US$330mn buyback at Cairn India Holdings, amounting to 'disguised repatriation'.
“These are not loans—they are capital extraction mechanisms hidden behind legal structures and jurisdictions,” Viceroy says, warning of violations of the General Anti Avoidance Rule (GAAR) and Foreign Exchange Management Act, 1999 (FEMA).
The letter raises alarm over Vedanta India entities being bound by covenants in offshore loans they are not a party to, effectively giving foreign lenders control over dividend declarations, mergers, asset sales, and borrowings.
Viceroy alleges this violates India’s FEMA and leaves Indian banks and stakeholders vulnerable to decisions made by VRL’s offshore creditors.
The research group also flagged Indian lenders' exposure to Anil Agarwal-affiliated shell entities such as Serentica,
Runaya Greentech, and
Minova Runaya. These entities, it claims, lack standalone revenues, survive on captive contracts with VEDL, HZL and BALCO, and use risk-free cost-plus agreements to siphon profits from Vedanta’s core Indian operations.
“Indian lenders are effectively financing offshore obligations through pass-throughs dressed up as independent companies,” Viceroy says.
Viceroy urged RBI to initiate a detailed investigation into cross-border flows, intercompany transactions and FEMA compliance within the Vedanta group. It also offered to cooperate fully with Indian regulators, stating that its analysis was based entirely on public domain information and financial filings.
“The RBI must not wait for a collapse or another crisis to act. The longer this persists, the greater the threat to India’s capital market integrity,” the report warned.
The letter follows recent remarks by Tuhin Kanta Pandey, chairperson of the Securities and Exchange Board of India (SEBI), who stressed the need to clamp down on financial fraud involving complex related-party structures.
At the time of publication, Vedanta and Vedanta Resources have not publicly responded to the allegations outlined in the Viceroy Research letter to RBI.
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If you don't like the facts because they are from a source you disapprove of, then they are dismissed as not true.
That is exactly what Trump does. He recently fired the head of the dept that puts out statistics like how many jobs were created per month.