India’s Adani hits back at Hindenburg, urges full disclosure

By Jayshree P Upadhyay, Aditya Kalra and Aditi Shah

NEW DELHI (Reuters) – India’s Adani Group on Sunday issued a detailed response to a report from Hindenburg Research that led to a loss of $48 billion in its shares, saying it complies with all local laws and necessary regulatory disclosures had done.

The conglomerate led by Asia’s richest man, Indian billionaire Gautam Adani, said last week’s Hindenburg report was designed to allow the US-based short seller to make profits, citing no evidence.

For 60-year-old Adani, the stock market collapse was a dramatic setback for a college dropout who quickly rose to become the world’s third richest man in recent years before dropping to seventh on Forbes’ richest list last week.

Adani Group’s response comes as its flagship company, Adani Enterprises, goes ahead with a $2.5 billion share sale. This was overshadowed by the Hindenburg report, which raised concerns about debt levels and the use of tax havens.

“All transactions entered into by us with entities that qualify as ‘related parties’ under Indian law and accounting standards have been duly disclosed by us,” Adani said in the 413-page response published late Sunday.

“This is rife with conflicts of interest and is only designed to create a false market in securities to enable Hindenburg, a recognized short-seller, to illegally make huge financial gains at the expense of countless investors,” it added. up to it.

Hindenburg did not immediately respond to a request for comment on Adani’s response on Sunday.

The report questioned how the Adani Group has used offshore entities in tax havens such as Mauritius and the Caribbean islands, adding that certain offshore funds and shell companies “covertly” own shares in Adani’s publicly traded companies.

The investigative report, Adani said, made “misleading claims about offshore entities” without any evidence.

Adani said on Thursday it was considering taking action against Hindenburg, who responded the same day by saying it would welcome such a move.

The Hindenburg report also said five of the seven major listed Adani companies have reported current ratios, a measure of liquid assets minus short-term liabilities, of less than 1, suggesting “increased near-term liquidity risk” according to the report. .

It said the main Adani listed companies had “considerable debts”, which has put the entire group in a “precarious financial position” and that shares in seven Adani listed companies have an 85% downside due to what it called “skyrocketing valuations” mentioned.

Adani’s reply stated that the group companies have “consistently deleveraged” over the past decade.

In defense of its practice of pledging shares of its originators – or major shareholders – the Adani Group said raising financing against shares as collateral was common practice worldwide and that loans are made by major institutions and banks based on thorough credit analysis.

The group added that a robust disclosure system exists in India and promoter pledge positions among portfolio companies had fallen from over 50% in March 2020 for some listed stocks to less than 20% in December 2022.


The Hindenburg report and its fallout are seen as one of the biggest career challenges for the billionaire, whose business interests range from ports, airports, mining and energy to media and cement.

Adani’s response included more than 350 pages of appendices containing excerpts from annual reports, public disclosures and past court rulings.

Hindenburg, Adani said, had sought answers to 88 questions in his report, but 65 of them related to matters disclosed by Adani portfolio companies in annual reports.

The rest, Adani said, involve public shareholders and third parties, and some were “baseless allegations based on imaginary patterns of fact.”

Hindenburg, known for shorting electric truck maker Nikola Corp and Twitter, said it has short positions in Adani companies through US-traded bonds and non-Indian derivatives.

Adani also responded to allegations made by Hindenburg regarding the company’s accountants, saying, “All these accountants appointed by us are duly certified and qualified by the relevant regulatory bodies.”

The answer comes just hours before the opening of the Indian market, when the $2.5 billion secondary stock sale begins its second day of registration. Friday’s plunge took shares of Adani Enterprises below the issue price, casting doubt on its success.

In a separate statement on Sunday, Adani Group’s chief financial officer Jugeshinder Singh said it is focused on the share sale and is confident it will succeed. He also said his anchor investors have shown confidence and remain invested.

“We are confident that the FPO (follow-on public offering) will also succeed,” he said.

(Reporting by Aditya Kalra, Aditi Shah, Jayshree Upadhyay and Anirudh Saligrama in Bengaluru; Editing by Kevin Liffey and Alexander Smith)

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