Adani Group Hits Back At Hindenburg Report, Calls Allegations 'Unsubstantiated'

Adani said 65 of the 88 questions have been addressed in the firm's public disclosures, describing the short seller’s conduct as “nothing short of a calculated securities fraud under applicable law"

Adani Group has also expressed confidence that the Rs 20,000 crore follow-on share sale of its flagship firm Adani Enterprises will sail through.

Adani Group has issued a detailed 413-page response to New York-based short seller Hindenburg Research. The group said that "unsubstantiated allegations and misleading narrative are backed by relevant documents". The Ahmedabad-based conglomerate led by Gautam Adani said that it complies with all local laws and had made the necessary regulatory disclosures, adding that the Hindenburg report was intended to enable the US-based short seller to book gains, without citing evidence.

Adani Group’s response also raises the questions against the ulterior motives and modus operandi of Hindenburg that has conveniently ignored the Indian judiciary and regulatory framework.

The detailed response from Adani Group covered its governance standards, credentials, creditworthiness, best practices, transparent conduct, financial and operational performance and excellence. The Hindenburg report has been made with a clear intent to profiteer at the cost of our shareholders and public investors. Its report is neither “independent” nor “objective. It is a manipulative document that is rife with conflict of interest and intended only for creating a false market in securities to book wrongful gain, which clearly constitutes securities fraud under Indian law.

Of the 88 questions posed by Hindenburg, it is pertinent to note that 68 refers to the matters that have already been duly disclosed by Adani Group companies in their respective annual reports, offering memorandums, financial statements and stock exchange disclosures from time to time. Sixteen out of 20 questions are pertaining to public shareholders and their sources of funds, while the balance four are simply baseless allegations. Needless to say that Hindenburg has created these questions to divert the attention of its target audience while managing its short trades to benefit at the cost of investors.

The report claims to have undertaken a "2-year investigation" and "uncover evidence", but comprises of nothing other than selective and incomplete extracts of disclosed information which has been in the public domain for years. We take serious objection to Hindenburg that chose to mislead the investors, watchdogs and policy makers at a time when Adani Group has launched country’s largest FPO.

According to the report, Adani Group is deeply committed to its stakeholders, and it is thankful to them for standing with us over the past 30 years. Shockingly, Hindenburg Research’s attack on the trust of Adani Group’s stakeholders undermines its commitment for the ‘Growth with Goodness’. Hindenburg Research has come up with a document covering selective and twisted extracts of already disclosed information to raise questions in the minds of Indian and global investors to mislead them about Indian growth story. It is an attack on the trust of Adani Group’s stakeholders undermines its commitment for the ‘Growth with Goodness’.

In its rebuttal published on Sunday, Adani said that some 65 of the 88 questions have been addressed in the conglomerate’s public disclosures, describing the short seller’s conduct as “nothing short of a calculated securities fraud under applicable law.” It reiterated it will “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.”

The lengthy response comes in the last leg of a share offer by Adani Enterprises, which received overall subscriptions of 1 per cent for the institutional and retail portions on Friday. While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were concerns that Hindenburg’s attack would sour sentiment.

According to Bloomberg, Adani Group took another blow on Monday, with the stock rout growing to $66 billion and its dollar bonds sold as the fight with short seller Hindenburg Research escalated.

While the broad selloff continued with Adani Total Gas and Adani Transmission down as much as 20 per cent again, there were signs of a divide emerging among traders. Adani Enterprises Ltd as well as Adani Ports & Special Economic Zone Ltd., rebounded following a rebuttal of Hindenburg’s fraud allegations.

“The initial reaction suggests the market is likely to reward Adani group companies with relatively better visibility of earnings and solid fundamentals such as Adani Ports, Ambuja and ACC,” according to Bloomberg Intelligence analyst Nitin Chanduka.

Meanwhile, Adani Group has expressed confidence that the Rs 20,000 crore follow-on share sale of its flagship firm Adani Enterprises will sail through. Group CFO Jugeshinder Singh told PTI that there will be no change in offering price or schedule is being considered due to temporary volatility in the market as the follow-on public offer (FPO) of Adani Enterprises Ltd is the best vehicle for strategic institutional investors to own a pie of the conglomerate's fast expanding airports, mining, roads, new energy and data centre businesses.