Vedanta Limited (VEDL) and its subsidiary Hindustan Zinc Limited (HZL) have come under fresh scrutiny following two detailed reports by Viceroy Research alleging corporate governance lapses, questionable brand fee arrangements, and alleged misuse of employee welfare funds for lobbying activities.
Vedanta – Zinc Twice Before You Act$HZL's unapproved brand fees carry an undisclosed termination clause, and appear to trigger an event of default and a sovereign call/put per its SHA with the Government of India. $VEDL #thread 1/ pic.twitter.com/psIrpUAegC
— Viceroy (@viceroyresearch) July 17, 2025
In its latest report dated July 17, 2025, Viceroy Research raised concerns over an unapproved “brand fee” imposed by Vedanta on HZL since October 2022. According to the report, the brand fee was introduced through a contract between HZL and Vedanta Resources Limited (VRL), allegedly without approval from the Government of India (GoI), which is a minority shareholder in HZL under a shareholder agreement (SHA).
The report claims this arrangement not only violates the SHA but also includes undisclosed termination clauses that could trigger an “event of default,” allowing the government to exercise sovereign call or put options on Vedanta’s stake in HZL. These options would potentially allow the GoI to either purchase Vedanta’s stake at a discount or force Vedanta to buy the government’s stake at a premium, exposing Vedanta to significant losses.
Viceroy also flagged that the brand fees are being used as rolling credit for VRL, secured against VRL’s loans, and allegedly serve more as a financing mechanism than a legitimate payment for services. The report suggests these arrangements weaken HZL’s financial position while benefiting the promoter-controlled VRL.
Earlier, in another report dated July 15, 2025, Viceroy Research alleged that shareholder entities Bhadram Janhit Shalika Trust (BJST) and PTC Cables Pvt Ltd (PTCC) — which it describes as undisclosed, promoter-controlled entities — have been diverting substantial employee welfare funds into political lobbying rather than employee benefits.
According to the July 15 report, since FY20, BJST and its subsidiary PTCC have collectively received over ₹1,499 crore in dividends from VEDL and HZL:
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FY25: ₹320.35 crore
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FY24: ₹373.30 crore
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FY23: ₹701.04 crore
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FY22: ₹3.80 crore
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FY21: ₹83.59 crore
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FY20: ₹166.61 crore
The report claims these entities have acted as hidden shareholder vehicles under the Agarwal family’s control, allegedly prioritizing lobbying and influence campaigns over the stated purpose of employee welfare.
Responding to these allegations, Vedanta Chairman Anil Agarwal stated on July 10, 2025:
“As far as this report has come, we are so transparent. My fundamental value is very important to remain disclosure and the transparent, and this is our strength.”
Both reports highlight what Viceroy Research calls “habitual governance failures” and urge the Government of India to take remedial action, including reclaiming allegedly misused brand fee payments and reassessing dividend payouts to BJST and PTCC.
The allegations have sparked fresh debate about transparency, related-party transactions, and corporate governance at Vedanta and its subsidiaries at a time when the group faces mounting scrutiny over its debt and cash flow position.
