The Adani Group responded in-depth to the Hindenburg report Adani case, which caused a $48 billion market sell-off on 29th January 2023. The company complies with all applicable local laws and has made all required regulatory disclosures. Without providing proof, the company, headed by Indian billionaire Gautam Adani, claimed that last week’s Hindenburg report was to allow the US-based short seller to earn gains. The stock market collapse has been a severe blow for Gautam Adani.
A school dropout who shot to prominence in recent years as one of the richest men in the world. And, Hindenburg Research, an acknowledged short seller’s, motive is to earn a big profit through deceitful ways at the expense of several investors.
Detailed 413-page report to the Hindenburg report Adani case
The answer from the Adani Group comes as its main business, Adani Enterprises, proceeds with the sale of $2.5 billion worth of shares. The Hindenburg report Adani, which raised issues over debt levels and the usage of tax havens, led to this. In its 413-page answer, published late on 29th January 2023, Adani stated that they have duly declared all of the transactions they have carried out with organisations that meet the requirements of “related parties” were under Indian law and accounting standards.
It further stated that this is riddled with conflicts of interest and designed to fabricate a false market in securities so that Hindenburg, an acknowledged short seller, can earn a big profit through dishonest ways at the expense of several investors. On 29th January 2023, a request for comment regarding the Adani response was received, but Hindenburg waited to answer. Its investigation raised concerns about the Adani Group’s use of offshore organisations in tax havens such as the Caribbean islands and Mauritius.
It also mentioned that some shell corporations and offshore funds sneakily own stock in Adani’s listed companies. Adani claimed the study report had “misleading claims around offshore entities” but provided no supporting data. Adani stated that it is considering pursuing legal action against Hindenburg, which declared the same day that it would favour the lawsuit. In response, Adani said that its Group firms have “consistently de-levered” over the last ten years.
The Adani Group defended its practice of pledging the shares of its promoters, or important shareholders, by arguing that this type of financing is widely used worldwide and that banks and large institutions only grant loans after conducting extensive credit analyses.
All related party transactions had been fully identified and disclosed – Adani Group
The Group stated that all related party transactions have been completely identified and disclosed in response to the Hindenburg report Adani case. As public shareholders, the Group was unable to comment on the trading patterns of offshore investors, it continued. Before publishing an order against an entity, SEBI conducts quasi-judicial procedures that include allowing the entity a chance to defend itself.
Depending on how serious the infractions are, the regulator may suggest punishments that range from monetary fines to exclusion from stock markets. However, it was not immediately apparent what sanctions the agency would ultimately mean in the Adani probe. Adani claimed that the study report had “misleading claims around offshore entities” but provided no supporting data. Adani stated that it is thinking about suing Hindenburg. Adani responded to the claim of “substantial debt” by saying that its Group firms have “consistently de-levered” over the last 10 years.
The Adani Group defended its practice of pledging the shares of its promoters, or important shareholders, by arguing that this type of financing is widely used around the world and that banks and large institutions only grant loans after conducting extensive credit analyses. In response to Hindenburg’s accusations regarding the company’s auditors, Adani stated that every auditor they have hired has the appropriate certification and qualifications from the applicable regulatory agencies.
Jugeshinder Singh, the Chief Financial Officer of the Adani Group, stated that the company is focused on the share sale and is optimistic about its success. Additionally, he added that its anchor investors had remained invested and exhibited faith. They are confident that the follow-on public offering, or FPO, will go smoothly as well.
A note of caution by the Adani Group for their stakeholders
The Adani Group claims that the Hindenburg report Adani case is a planned attack on India, its independence, institutions’ integrity and calibre, as well as the country’s aspirations and growth story. It is not just an unjustified attack on any one firm.
The Hindenburg Report has three main themes:
- Presentation of information in the public domain that is selectively and manipulatively presented in order to fabricate a story.
- Total ignorance of the relevant laws, accounting rules, and industry norms or wilful disregard for them.
- Disdain for Indian establishments, such as the judiciary and regulatory bodies.
