Vedanta, Hindustan Zinc shares tank after short-seller alleges 'material discrepancies' in financials

Shares of Anil Agarwal-owned mining conglomerate Vedanta Ltd. and its subsidiary Hindustan Zinc Ltd. fell as much as 7% on Wednesday, July 9, after a short-seller, by the name of Viceroy Research has alleged material discrepancies in the group's financials.

Shares of Vedanta fell as much as 7.4% before recouping some of those losses, while those of Hindustan Zinc are down 2.8%.

Viceroy has written in its note that it is short on the debt stack of Vedanta Resources, the parent company of Vedanta Ltd.

"The entire group structure is financially unsustainable, operationally compromised and poses a severe, under-appreciated risk to creditors," Viceroy's note said.

Vedanta's interest expenses vastly exceed its reported note rates, ad continues to increase despite paydowns and restructuring, according to the Viceroy note, which further stated that expenses across operating subsidiaries are systematically capitalised, artificially inflating profits and asset values. "This is a material misrepresentation," the note said.

CNBC-TV18 had reached out to Vedanta and is awaiting a response.

Shares of Vedanta are currently trading 4.4% lower at ₹436.35, while those of Hindustan Zinc are trading 2.7% lower at ₹424.55.

This is a developing breaking story and will be updated with more details.