Key Points

The company in question is PTC Cables Pvt. Ltd (PTCC), which holds a 1.91 per cent stake in Vedanta Ltd, that has a market cap of Rs 1.75 lakh crore. PTCC is owned by Bhadram Janhit Shalika Trust (BJST), which Viceroy alleges is controlled by the Agarwal family, founders of the Vedanta Group. However, the Vedanta Group has dismissed the allegations as “baseless.”

Viceroy has alleged that PTCC received Rs 1,500 crore in dividend income from Vedanta over the past five years, and the capital was "upcycled" to promoter-linked entities. “PTCC exists for one purpose: to quietly recycle Vedanta’s cash into promoter-controlled vehicles while maintaining the illusion of independence,” the Viceroy report alleged.

“These assertions are baseless. Neither BJST nor PTCC are part of the promoter group as defined under applicable regulations, and their shareholding has been transparently disclosed in public filings,” a Vedanta spokesperson said. The spokesperson also said that the company was compliant with the disclosure norms as stipulated by the Securities and Exchange Board of India (Sebi) and the Companies Act, 2013.

Viceroy said its assertions are based on publicly available records. In a 2009 income-tax case, BJST’s correspondence address was listed as Anil Agarwal’s personal residence in Mumbai. In another case, the trust’s address was that of Todarwal & Todarwal, a firm linked to Arun Todarwal, who currently serves as a director on the board of Sterlite Power Grid Ventures, a Vedanta subsidiary. Todarwal has earlier served as a director on the boards of Vedanta Group companies Hindustan Zinc Ltd, Sterlite Technologies and BALCO.

The report acknowledged that no conclusive documentation of current control was available, but stated that Indian trusts are subject to less stringent disclosure obligations than companies. Viceroy also quoted former Vedanta employees who claimed that the Agarwal family's control over PTCC was an "open secret" within the company. However, these employees were not named.

In addition to alleging hidden promoter ownership, the report mentions governance concerns at PTCC. The company was incorporated in 1993 with the Agarwal family as shareholders and was transferred to BJST in 2017. Its current directors are Todarwal and Kannan Ramamirthan.

Ramamirthan is an independent director of Vedanta subsidiary Hindustan Zinc. He has earlier served on the boards of other Vedanta group firms such as Talwandi Sabo Power Plant, BALCO, Sterlite Energy, and Sterlite Interlinks.

Vedanta has not disclosed in its filings that PTCC, which is classified as a public shareholder, has directors with long-standing associations with the group, the report states.

Earlier in a 2020 note, proxy advisory firm Stakeholder Empowerment Services (SES) had stated that BJST was previously known as the SIL Employee Welfare Trust and was linked to Sterlite Industries Ltd, which was later merged into Vedanta. The trust was subsequently renamed as BJST.

“It is not clear as to who presently controls the BJST,” SES had written. However, if the firm was under the control of Vedanta, then PTCC should be classified as a promoter shareholder, it said.

Viceroy’s first report on the Vedanta Group was published on 10 July, a day before Vedanta Ltd’s annual general meeting (AGM). The initial report triggered a drop in the company’s stock, though shares later recovered.

After the Viceroy report, Vedanta issued a statement to the stock exchanges, alleging that the report was published without any attempt to contact the company and with the sole objective of creating false propaganda.

Meanwhile, Viceroy Research has also said that it awaits a response from the Securities and Exchange Board of India (Sebi) to its queries on the Vedanta Group. Viceroy has disclosed a short position in the bonds of Vedanta Resources, an unlisted holding company of the group, but said it has no exposure to any other listed Vedanta companies in India.

- IANS