Hindenburg Research allegations baseless, claims Adani group

The Adani Group and its faithful investors woke up to some distressing news on Thursday, when Hindenburg Research published a report casting aspersions of non-compliance of regulations on Adani. The report raises questions with regards to Adani’s alleged usage of offshore entities in Mauritius and the Caribbeans as tax havens.

Hindenburg Research, a company that typically shorts stock, creates panic in the market and then issues such reports, also alleged that shell companies apparently owned stocks in Adani’s listed firms. Consequently, this created chaos in the stock market ahead of Adani’s FPO sale on 27th January 2003. The timing does raise questions about the intentions of Hindenburg. Gautam Adani dropped in the ranking of world’s richest men as his companies suffered losses of $48 billion in market cap; but that is part of the numbers game. 

In response to the 106-page Hindenburg Research report and the 88 questions raised by them, Adani Group issued a 413-page rejoinder detailing their interpretation of the narrative, with substantial data, evidence and even document snippets to buttress their point. The contention of Adani group is that Hindenburg had conveniently packaged selective data that is already available in the public domain and presented it to extract maximum mileage for their short positions in Adani group securities.

Adani group underlined that all transactions made into any of the alleged entities were purely arm’s length business transactions. All the books of the group are audited and approved; predominantly by one of the Big-4 audit firms. On the subject of debt vulnerability, Adani group underlined that the overall debt levels as a share of EBITDA had actually come down.

The Adani narrative is that the Hindenburg report maligns India’s national reputation and business integrity. The CFO, however, expressed confidence over the Rs20,000 crore FPO of Adani Enterprises Ltd sailing through smoothly.