Hindenburg made windfall gain by calculated securities fraud: Adani

In response to a 106-page report by Hindenburg, the Gautam Adani-led conglomerate has issued a 413-page long response answering all the 88 questions asked by the US-based research firm.

“The truth of the matter is that Hindenburg is an unethical short seller. A short seller in the securities market books gain from the subsequent reduction in prices of shares. Hindenburg took “short positions” and then, to effect a downward spiral of share price and make a wrongful gain, Hindenburg published a document to manipulate and depress the price of stock, and create a false market,” Adani said, adding that Hindenburg’s conduct is nothing short of a calculated securities fraud under applicable law.

Following the release of the report, in which several allegations of fraud and malpractices were raised, shares of Adani stocks were in a freefall for two consecutive trading sessions and eroded Rs 4 lakh crore wealth.

“The allegations and insinuations, which were presented as fact, spread like fire, wiping off a large amount of investor wealth and netting a profit for Hindenburg. The net result is that public investors lose and Hindenburg makes a windfall gain,” Adani said.

“The allegations and insinuations, which were presented as fact, spread like fire, wiping off a large amount of investor wealth and netting a profit for Hindenburg. The net result is that public investors lose and Hindenburg makes a windfall gain,” Adani said.

The company said out of the 88 questions asked by the whistle-blower, 65 of them 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 5 are baseless allegations based on imaginary fact patterns,” it said.

This is the first detailed response by Adani Group against the allegations which were timed just ahead of the launch of Adani Enterprises follow-on public offer (FPO).

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 ambition of India, Adani said.

Adani’s lengthy response to the allegations is full of references from annual reports, orders from Customs, Supreme Court, NCLT and high courts.

In the damaging report, Hindenburg alleged stock manipulation and accounting frauds at Adani Group. “Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” the report said. As a disclaimer, the firm, led by Nate Anderson, said it has taken short positions in Adani Group companies.

Despite the share price of Adani Enterprises slipping well below the FPO price band of Rs 3,112-3,276, the company has said that it will not change neither the price nor the schedule. The Nifty stock had ended 18.5% down at Rs 2,762.15 on Friday.