Indian billionaire Gautam Adani responded to the claims made in January by the US-based short-seller Hindenburg Research, stating that the accusations were made up of a combination of disproven allegations and targeted misinformation by special interests. He said that the Hindenburg Report Adani was intended to harm his name and make money by causing the stock prices to fall. In order to safeguard investors’ interests, the Adani Group ultimately opted to return the funds despite a fully subscribed Follow-On Public Offer.
Accounting fraud allegation through the Hindenburg Report Adani
In January 2023, US short-seller Hindenburg Research released a damaging report accusing Adani Group of accounting fraud and stock price manipulation. This sparked a stock market crash that, at its worst, reduced the market value of the conglomerate by about USD 145 billion. Adani Group has denied all of Hindenburg’s charges imposed on the Hindenburg Report Adani. They are putting together a recovery plan that involves changing its objectives.
They are also slowing down the pace at which they invest in new projects. Promoters have sold shares worth Rs 11,330 crore in two tranches to renowned US global equity investment boutique GQG Partners since May. According to NSDL (National Securities Depository Limited) statistics, Adani Enterprises raised the additional debt by pledging 21.4% of the company’s shares in Adani Road Transport. During the September 2022 bond offering, it committed 1.95 per cent of the shares of Adani Road Transport.
Adani claims Hindenburg’s Report is a “Calculated Attack” on India
The report is not only an unjustified attack on one particular company; it is also a deliberate attack on India, its institutions’ independence, integrity, and quality, as well as its aspirations for future progress.
All business dealings we have had with organizations that are considered “related parties” under Indian law and accounting principles have been fully reported by them. According to the Adani report, “holding short positions” in Adani equities entails betting against the stock rising. According to Adani Group, the report’s sole purpose was to inflate the price of stocks.
Their track record, according to Gautam Adani, speaks for itself
Adani expressed his gratitude for the group’s stakeholders’ assistance as they overcame these obstacles. Additionally, he added, “Despite the fact that we raised billions from international investors, no rating agency lowered our ratings during this crisis. This has most strongly validated the confidence that investors have in the Adani Group firms.” Top executives are reportedly scrutinizing their connections with Adani and being more cautious when taking on new clients, according to those aware of the matter.
At the same time, a regulatory investigation, which is meant to be completed next month, is ongoing.
The group claimed that every complaint was untrue
Caught up in the corporate-cum-stock market turbulence, Adani Group responded to the scathing charges made under the Hindenburg Report Adani on January 29, 2023, by comparing them to a “calculated attack” on India, its institutions, and its success narrative. The group claimed that every complaint was untrue and that it had already answered 68 of the 88 questions raised by Hindenburg in its annual reports, offer materials, and stock market disclosures.
The remaining 20 questions, it said, were made up of four false accusations and 16 inquiries about public shareholders and their funding sources. The report is filled with conflicts of interest and was written mainly to create a fictitious securities market, according to Adani Group. The timing of the study, as Adani Enterprises prepared to launch the largest equity FPO, further emphasized the fact that bad intentions were evident.
Additionally, the organization claimed that the Hindenburg Research lacked a solid grasp of the Indian capital market and legal structure at several times. For instance, it alleged that Hindenburg Research had erroneously claimed that Mahan Energen received a $1 billion loan from Emerging Market Investment DMCC.
In truth, “Emerging Market acquired the $1 billion ‘unsustainable debt’ of Mahan Energen from its lenders for $100 as part of a resolution plan duly approved by the National Company Law Tribunal (NCLT) under the Indian Bankruptcy Code.” These are ill-intentioned attempts to cast doubt on legitimate transactions, the response said.
Conclusion
The Adani Group reaffirms its adherence to all applicable laws and regulations. To defend the interests of all their stakeholders, the Group is dedicated to the highest levels of governance. The Adani Portfolio also has extremely robust internal and audit controls. Adani Portfolio’s listed firms all have a strong governance system. The Audit Committee of each publicly traded firm is wholly composed of Independent Directors and is chaired by an Independent Director.
The Audit Committee recommends appointing Statutory Auditors to the Board of Directors. Adani Portfolio companies have a declared policy of setting Big Six or regional global leaders as Statutory Auditors.
