Adani hits again at Hindenburg, saying it made all of the disclosures

  • Adani issues 413-page refutation of Hindenburg report
  • A US short seller’s report triggered a fall in Adani shares
  • Adani says laws are obeyed, necessary disclosures
  • Adani CFO confident in $2.5 billion share sale

NEW DELHI, Jan 30 (Reuters) – India’s Adani Group on Sunday issued a detailed response to a Hindenburg Research report that sparked a $48 billion loss in its shares.

The conglomerate, run by Asia’s richest man, Indian billionaire Gautam Adani, said last week’s Hindenburg report was intended to allow the US-based short seller to post profits without citing evidence.

For Adani, 60, the stock market crisis was a dramatic setback for a high school dropout who in recent years has quickly risen to become the third richest man in the world before slipping to seventh on Forbes’ list of the rich last week.

Adani Group’s response comes as its flagship, Adani Enterprises (ADEL.NS), advances a $2.5 billion stock sale. This was overshadowed by Hindenburg’s report, which raised concerns about debt levels and the use of tax havens.

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

“This is fraught with conflicts of interest and is only intended to create a false market for securities to allow Hindenburg, a recognized short seller, to achieve massive financial gains through illegitimate means at the expense of countless investors,” he added.

Hindenburg said on his website that Adani’s response “broadly confirmed our findings and ignored our key questions.” He reiterated that he was short the Adani group through US-traded bonds and non-India-traded derivative instruments.

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

The research report, Adani said, made “misleading claims about offshore companies” without any supporting evidence.

Hindenburg said it found “adani’s lack of direct and transparent responses” to the allegations of offshore company use “told”.

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

Hindenburg’s report also states that five out of seven major Adani publicly traded companies have reported current ratios, a measure of cash and cash equivalents less current liabilities, of below 1, indicating “an increased near-term liquidity risk.”

It said key Adani listed companies had “significant debts” which left the entire group on a “precarious financial footing” and that shares of seven Adani listed companies had fallen 85% on so-called “sky high valuations”. exhibit.

Adani’s response states that its group companies have “consistently reduced debt” over the past decade.

Adani Group defended its practice of pledging shares of its founders – or major shareholders – saying that raising financing against shares as collateral is a global practice and loans are made by major institutions and banks on the basis of thorough credit analysis.

The group added that India has a robust disclosure regime and its promoter pledge positions across all portfolio companies have fallen from more than 50% in March 2020 for some listed stocks to less than 20% in December 2022.


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

Adani’s response contained more than 350 pages of attachments containing extracts from annual reports, publications and previous court decisions.

Hindenburg, Adani said, looked for 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, relate to public shareholders and third parties, and some are “baseless allegations based on imaginary patterns of fact.”

Hindenburg said, “Adani did not specifically answer 62 of our 88 questions.”

Hindenburg is known for short-circuiting electric truck maker Nikola Corp (NKLA.O) and Twitter.

Adani also responded to allegations by Hindenburg regarding the company’s auditors, saying, “All of these auditors that we engage have been properly certified and qualified by the relevant statutory bodies.”

His reaction comes just hours before the market opens in India, when the second share sale, valued at $2.5 billion, begins its second day of subscription. Friday’s plunge took Adani Enterprises shares below the issue price and cast doubt on its success.

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

“We’re confident that the FPO (Follow-on Public Offering) will also sail through,” he said.

Reporting by Aditya Kalra, Aditi Shah, Jayshree Upadhyay and Anirudh Saligrama in Bengaluru; Edited by Kevin Liffey, Alexander Smith and Muralikumar Anantharaman

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