Kyma Capital alleges 'siphoning of funds' by Vedanta to its London parent

Mumbai: London-based Kyma Capital, a minority shareholder in Vedanta Ltd has asked the board of the Anil Agarwal company to recall loans amounting to $956 million from its parent and sought a “special audit” by a “big four” firm.Terming it a clear-cut case of “siphoning of funds and value” that belongs to Vedanta Ltd and its stakeholders, the hedge fund alleged that the board seemed to have been “sleeping at the wheel” when related party transactions with controlling shareholders should have brought forth higher scrutiny from the board.This could well trigger a legal battle if a locally listed commodities company does not respond with the investor seeking an immediate call of the loan.“It is Kyma Capital’s view that this is a clear cut case of siphoning of funds and value that belongs to Vedanta Ltd, and all its shareholders,” it said in a note. ET has seen a digital copy of the note.Akshay Shah, a former Blackstone Group manager runs Kyma Capital, which owns less than one percent in Vedanta Ltd.The fund has asked the Vedanta board to appoint one of the “Big Four” accounting firms to allay investor concerns related to governance. The shareholder also pointed to failure of duties of independent directors.Indian law is clear on Independent Director duties and have punitive penalties,” the hedge fund said.“These duties have very clearly breached.”Vedanta group and Kyma Captial could not be contacted immediately for comments.Billionaire Anil Agarwal’s holding companies including Vedanta Resources face a combined $1.17 billion in debt that’s maturing next year, show data compiled by Bloomberg.“Given the timescales involved it seems apparent to Kyma that Vedanta was directly or indirectly was funding its own delisting,” the fund said.About a month ago, the group tried to take Vedanta Ltd, listed on the Indian stock bourses private but failed when Life of Insurance Corporate, a major shareholder demanded a higher premium. This resulted in credit-rating downgrades as concerns were raised about the funding needs of Vedanta Resources.We will also be raising our concerns with other regulators and legal authorities over the coming weeks, Kyma said adding that it would approach the Securities Exchange Board of India, the capital market regulator.

from Economic Times https://ift.tt/3nowrqP