“This is not merely an unwarranted attack on any specific company but a calculated attack on
India, the independence, integrity, and quality of Indian institutions, and the growth story and the ambition of India.” a 413-page response PDF from Adani Group to Hindenburg Research allegations reads.
Hindenburg Research report alleged that the Adani group is the “biggest con in corporate history”. The report claimed that the conglomerate is engaged in accounting fraud and stock manipulation. The report also accused Adani of burying companies under debt that has put the conglomerate on a financial back foot.
Hindenburg cited several transactions linked to Adani Carmichael mine and rail operations in Queensland, that Adani didn’t disclose to its investors that some of their Australian assets had degraded value.
The short seller’s allegations wiped out value worth billions of dollars from the giant Adani empire. Gautam Adani was the third richest man in the world until more than $22 billion vanished from his wealth. Adani now falls to the seventh position in the riches list, according to Forbes. Adani and its companies are said to be close with the Indian prime minister Narendra Modi.
Hindenburg took a short position in the conglomerate before publishing the report. Short sellers like Hindenburg leverage the falling share value of the companies they target. They target the companies which they thought of as overvalued and conducting fraudulent business practices. Hindenburg Research, named after the hydrogen-filled airship crash disaster, looks at the stocks that can crash easily and target them.
Adani, in response, released a lengthy statement published on their website, responding to the questions raised in the report by Hindenburg. The response is attached with the supporting documents from the company and court rulings. The response also raised questions on the motive, legality, and transparency of the activist fund, Hindenburg Research founded by Nate Anderson.
Hindenburg alleged the Adani group of being engaged in undisclosed and widespread transactions, whereas the Adani group said that all the deals and transactions are accounted for properly. Adani claimed that the borrowed money is in line with the industrial benchmarks.
The allegations by the US Company also alleged Samir Vora, executive director of Adani Australia, was the key figure in the diamond trading scam which was designed to defraud the government of India. Adani countered the allegations saying that the matter was closed in their favor by the judiciary of India.
Adani claims that a US corporation has disrespected Indian regulators and the judiciary by bringing up old allegations that have been determined to be false, judicially.