Home / Companies / News /  Selective misinformation, concealed facts, ulterior motive: Adani fires broadside

MUMBAI : The Adani group escalated its fight against Hindenburg Research, releasing a response to the short-seller allegations while labelling the US firm as the “Madoffs of Manhattan", referencing infamous fraudster Bernie Madoff, accused of pulling the biggest Ponzi scheme in history.

Adani called the Hindenburg report a malicious combination of selective misinformation and concealed facts. In its over 400-page response, the Adani group said that it is tremendously concerning that the statements of an entity sitting thousands of miles away, with no credibility, has caused a serious and unprecedented adverse impact on its investors.

The Hindenburg report has wiped off 4.4 trillion of investor wealth in Adani stocks in the last two trading sessions.

In its detailed response, Adani said that the short sellers’ report employs selective presentation of matters already in the public domain to create a false narrative, including complete ignorance or deliberate disregard of the applicable legal and accounting standards as well as industry practice and shows contempt for the Indian institutions including the regulators and the judiciary.

Adani raised questions on Hindenburg’s credibility, claiming that for an organization that seeks transparency and openness, nothing much is known about either Hindenburg or its employees or its investors. “Despite all its talks of “transparency", Hindenburg has concealed the details of its short positions, the source of its own funding, who is behind them, the illegality underlying the synthetic structures by which they hold such positions, or the profit it has made by holding such positions in our securities," it said.

Adani claimed the report is neither “independent" nor “objective" nor “well researched".

“The report seeks answers to “88 questions"—65 of these relate to matters that have been duly disclosed by Adani portfolio companies in their annual reports available on their websites, offering memorandums, financial statements and stock exchange disclosures from time to time. Of the balance 23 questions, 18 relate to public shareholders and third parties (and not the Adani portfolio companies), while the balance five are baseless allegations based on imaginary fact patterns," Adani’s response stated.

Adani claimed that several of the allegations are either already disclosed or have been discredited and disproven. “By way of an example, there are multiple false narratives being created in relation to certain allegations concerning diamond exports, which matters have all been closed by the Appellate Tribunal (CESTAT) in our favour. This decision has been further confirmed by the Supreme Court itself twice over, a fact which has been deliberately ignored and concealed in the Hindenburg report," the Adani group said.

Adani added that the Hindenburg report made baseless allegations around transactions which are, in fact, compliant with the law, fully disclosed and on proper commercial terms:

“Allegation no. 9, 15, 19, 24, 25, 32, 33, 35, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 53, 54, 55, 56, 57, 58, 59, 60, 61, 81, 82 & 83 are again a selective regurgitation of disclosures from the financial statements of Adani entities to paint a biased picture. These disclosures have already been approved by third parties who are qualified and competent to review these (rather than an unknown overseas short-seller) and are in line with applicable accounting standards and applicable law," it said.

It added that the mala fide intent of Hindenburg can be clearly seen from it suggesting structures that would not be in compliance with corporate governance. Further, the response claims that the report has made several misleading claims around offshore entities being allegedly “related parties" without regard for applicable law and standards.

“Allegations no. 4, 36, 37, 38, and 39 from the report are in reference to offshore entities. The queries make reckless statements without any evidence whatsoever and purely on unsubstantiated speculations without any understanding of the Indian laws around related parties and related party transactions," it said.

Adani also stated that the report makes false suggestions based on malicious misrepresentation of the governance practices in Adani’s portfolio.

“An example of where the report exposes its motives is the question around “convoluted structures" and multiplicity of subsidiaries while failing to comprehend that in the infrastructure business, especially in a sprawling geography like India, most large corporates operate in a similar fashion because projects are housed in separate SPVs, and these need to be ring-fenced from a lender perspective for limited recourse project finance and, in many cases, on account of specific regulatory requirements," Adani said.

The response also claimed that Hindenburg had used manipulated narratives around unrelated third-party entities.

The Adani response concluded that it will exercise its rights to pursue remedies to safeguard its stakeholders before all appropriate authorities.

Swaraj Singh Dhanjal
" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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