Vedanta Faces Rs 71 crore fine over fly ash disposal; company to contest order

Vedanta Limited has been issued a notice by the Odisha State Pollution Control Board, demanding an environmental compensation of Rs 71.16 crore. This penalty arises from alleged violations concerning the unauthorised disposal of fly ash. The notice, dated 10 April 2025, was served under the Fly Ash Notification issued by the Ministry of Environment, Forest and Climate Change. Vedanta disputes these allegations and has declared its intention to pursue appropriate legal remedies. The company contends that the decision was made without adequate consideration of its compliance records and prior submissions.

In a regulatory filing with the BSE and NSE, Vedanta stated, "Vedanta believes it has a strong case on merits and is hopeful of a favourable outcome," indicating their confidence in overturning the fine. The company expressed that the delay in disclosing this information was due to internal assessments and fact verification. Vedanta also mentioned that this order is not expected to have any material financial impact on the company. 

The fine comes amid increasing regulatory scrutiny and a growing focus on environmental, social, and governance (ESG) metrics by investors. Fly ash, a byproduct of coal combustion in power plants, can pose significant environmental hazards if not disposed of properly, prompting stringent regulatory oversight. The notice against Vedanta reflects the ongoing regulatory attention on environmental practices within the industry. 

Shares of Vedanta closed 2.65% higher at Rs 380.30 on the BSE, even as news of the fine emerged. 

The brokerage firm Investec has upgraded Vedanta Ltd., a mining conglomerate owned by Anil Agarwal, from a "hold" to a "buy" rating. Despite this upgrade, Investec has decided to keep its price target for Vedanta unchanged at Rs 510. This price target still suggests a potential upside of 35% from Vedanta's closing price on Tuesday.

Vedanta's shares have seen a 17% correction in the past month, a move that Investec views as an attractive opportunity for investors. Investec highlights that Vedanta's average free cash flow and dividend yield for financial years 2026 and 2027 are at 12% and 7% respectively. These strong yields have influenced Investec's decision to upgrade Vedanta.