December 17, 2025 – For years Vedanta Resources Limited (VRL) has relied on complex offshore structures to upstream cash, service debt and falsely reassure bondholders that Indian regulatory risks are contained at the operating level.
The Indian Income Tax Department (ITD) has now asserted that the main purpose of the establishment of Vedanta Holdings Mauritius 2 Limited (VHM2L), which holds ~12.6% of VEDL under the VRL umbrella, was to evade tax.
- The GoI has quantified the alleged tax evasion at ₹1,308 crore ($145m). Penalties of up to 200% can be imposed in addition to repayment of underlying tax owed. An adverse ruling will also constrain VRL’s ability to loot VEDL and service its debt going forward.
- The ITD has issued 6 statutory demands, held multiple hearings, received multiple submissions, and finally issued an adverse order to VHM2L: none of which was disclosed to bondholders or acknowledged as a risk in the bondholder prospectus. This constitutes a clear breach of Vedanta’s own disclosure policy.
- The GAAR record corroborates Viceroy’s prior findings that core VRL functions are, in fact, performed by VEDL employees in India, not VRL itself.
- The record shows that since 2014, VEDL has provided administrative and accounting services to VRL and its group companies for which VEDL is paid $350,000 per year. Against this backdrop, the hundreds of millions of dollars paid by VEDL to VRL lack any credible justification.
Viceroy have reported countless, material high-stakes investigations from which Bondholders have been kept in the dark for years. These will continue to pile on to VRL’s books. By all accounts: VRL appears to have resorted to intentionally breaking the law in order to service debt.