ED Conducts Searches At Vedanta Group Premises Across Mumbai, Delhi In FEMA Probe Over Overseas Transactions

Mumbai, June 2: The Enforcement Directorate (ED) has launched searches at multiple corporate premises linked to the metals-to-mining conglomerate Vedanta Group. The operations, spanning locations in Delhi, Mumbai, Udaipur and other key centres, are part of an ongoing investigation into alleged violations of the Foreign Exchange Management Act (FEMA).

According to officials familiar with the development, the searches commenced on Monday and extended into Tuesday. ED teams are currently examining financial data, digital records and corporate documents to verify the nature of specific cross-border transactions.

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Investigators scrutinise overseas financial arrangements

While the federal agency has not released a formal public statement detailing the exact nature of the non-compliance, sources indicate the probe centres on overseas financial arrangements involving group entities.

Specifically, investigators are scrutinising royalty and brand fee payments made by the Indian listed entity, Vedanta Ltd, to its London-based parent company, Vedanta Resources Ltd.

While the agency has not issued a public statement outlining the exact nature of the non-compliance, sources indicate that investigators are heavily scrutinising multi-crore royalty and brand fee payments made by the Indian listed entity to its London-based parent company, Vedanta Resources Ltd.

Vedanta Ltd holds a market capitalisation of approximately Rs 1.3 lakh crore, whereas its UK-based parent is heavily debt-laden, with a gross debt reported at roughly Rs 74,000 crore. The historical practice of the cash-rich Indian subsidiary paying steep brand fees to its cash-strapped foreign parent is a central point of the current regulatory assessment.

Searches coincide with demerger plans

The searches come at a significant time for the company, which is in the process of implementing a major demerger plan. The restructuring will split Vedanta's existing operations into separate business verticals that will be listed independently.

The group’s Chairman Anil Agarwal had announced last month that all the demerged entities were expected to be listed within a month, as the restructuring will create separate companies focused on aluminium, oil and gas, power, as well as iron and steel businesses.

Company says it is cooperating with investigators

Confirming the ED action, a Vedanta spokesperson said the company was cooperating fully with investigators.

"We are extending full cooperation to the authorities and are providing all information sought. The company remains committed to compliance with all applicable laws and regulations. As the matter is currently under regulatory process, we are unable to comment further at this stage," the spokesperson said.

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Vedanta Group is reportedly India’s largest producer of metals and critical minerals, with operations in multiple countries, including India, Africa and several countries in West and East Asia. Following the searches, the company’s stock price fell by around 4 per cent from the day’s high.

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