Vedanta Group promoters siphoning profits via exclusive HZL supply deal: Viceroy
On Wednesday, the American short seller Viceroy Research said that the supporters of the Vedanta Group have called “margins” from the listed group company Hindustan Zinc Ltd (Hzl).
Minova Runaya Pvt. LTD (MRPL), resin capsules, rock bolting systems and wire mesh, which is a 49 % promotional asset, has a special contract for the supply of products such as wire mesh. When used in mining, these products are typically commodified and low margin, but MRPL added that the company has made very little production. Viceroy was the only customer of MRPL in Hzl.
“This company (MRPL) has only one purpose, buying commodified products, making a 30% marking on them, and selling to a hilly caught,” he said in the short seller note that “more”.
Between MY21 and FY24, Minova earned total income to run LaSnowy 553 Crore La92 Crore announced by referring to the regulatory applications of the short vendor company.
Vedanta rejects the charges
Vedanta rejected all the allegations. A Hindustan Zinc spokesperson, “the short sellers in question continuously informed ‘reports’ shared with misleading information,” he said. The spokesman said the latest claims ignored the “solid” governance protocols and then the Hindustan zinc.
Viceroy Research has published nine notes about Vedanta in the last two weeks. London -based group holding company Vedanta Resources has a short position in the debt.
Hindustan Zinc won the shares of 0.82% La446.9 on Wednesday at BSE. Vedanta Ltd’s shares reached 1.12% higher level La455.6 each. Benchmark Sensex closed 0.66% higher.
The shares of the two companies fell after the publication of Viceroy’s first report on July 9, but since then he recovered and did not react to the next eight reports.
MRPL’s ownership, contract conditions
While the farewell group has a 49% stake of MRPL, the company’s remaining 51% shares are kept by Minova Minetek, a Hydarabad -based mining, quarry and construction equipment manufacturer, according to the private company data platform Tracxn.
“MRPL has a long-term sales contract that provides strong income visibility with fast,” Crisil Ratings said that Hzl has rated the long-term debt with a stable appearance.
“According to the contract, the rating agency should supply the whole ground support product requirement from MRPL. This provides healthy use for MRPL’s production capacities,” he said.
MRPL was prepared by Hindustan Zinc as a reliable supplier for place support after the screening processes and approvals taken from the audit committee and the board in accordance with the company spokesman. The company has developed solutions that meet the unique features and standards of Hindustan Zinc’s underground mines. They said that the transactions made with MRPL were supported by independent companies.
Red Flags in MrPL’s books
Regarding the lack of MRPL’s production capabilities, Viceroy said that the company’s accounts did not produce anything until at least MY24.
“Even then, the only product he produced was Wire Mesh, which is such a simple and cheap product that a fully automatic line can be set below. La1 Crore, ”the short seller said.
Viceroy also drew attention to some inconsistencies in MRPL’s financial statements. For example, the income from Hzl made up 114% of MRPL’s income in 2014. In the same year, he declared MRPL La216 CRORE TANK SALES SALE ONLY TRANSPORT La66 concrete assets in the balance sheet. These inconsistencies have been observed continuously in previous years.
