A company’s research has recently alleged that Vedanta Ltd. may have funneled nearly ₹81,000 crore offshore through a complex web of transactions. Labeling it a “systemic threat” to India’s financial system, the report has urged the Reserve Bank of India to launch an in-depth probe into the matter as the transfers might violate FEMA norms. The allegations raise serious questions about corporate governance, regulatory oversight, and the role of auditors in detecting such large-scale financial movements.
Alleged ₹81,000 Crore Offshore Drain at Vedanta; Alarms RBI.
This Research has raised alarms over a potential ₹81,000 crore offshore drain from Vedanta Ltd. via a complex structure of loans, fees, and intercompany transfers. The firm has called on the Reserve Bank of India (RBI) to launch a full investigation, warning of a systemic risk to India’s capital markets. Between financial years 2021–22 and 2025–26, Vedanta and its subsidiaries reportedly paid over ₹12,820 crore in brand and strategic services fees to parent company Vedanta Resources Ltd (VRL). These fees, according to sources, are unexplained and stand in stark contrast to industry norms. Unlike Tata Steel’s brand fees, which are capped at ₹200 crore annually, Vedanta’s are disproportionately high. The firm argues that these charges act as disguised loans, allowing profits to be siphoned offshore without being recovered by Indian shareholders.
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VRL Seen as a Parasite Draining Its Host
The research portrays VRL as a holding company reliant entirely on cash flows stripped from its Indian subsidiary, Vedanta Ltd (VEDL), to service its debt burden. As VEDL paid ₹68,372 crore in dividends, far exceeding its free cash flow, its net debt surged by ₹47,924 crore. Meanwhile, VRL’s offshore creditors benefit while VEDL’s minorities and lenders face growing exposure. When questioned by the Enforcement Directorate (ED) in July 2023 over brand fee irregularities, VRL reportedly agreed to refund ₹1,030 crore to VEDL. However, the refund was not disclosed to shareholders or regulators. Post-intervention, these refunds became standard year-end adjustments, none of which were reflected in financial statements or public disclosures, leaving institutional investors in the dark.
RBI Called in Before It’s Too Late
The company has called on the RBI to initiate a forensic review of Vedanta’s financial flows, FEMA compliance, and intercompany accounting structures. The firm warned that delay could pave the way for regulatory undercutting and potential damage to market integrity. Given that Vedanta’s parent company holds billions in offshore debt, the stakes for Indian banks and bondholders are substantial.
Why This Matters
Raises urgent questions about financial governance in India’s largest mining group
Signals risk to minority shareholders and Indian creditors due to opaque corporate structures.
Challenges the adequacy of regulatory oversight over complex cross-border corporate networks