Adani Group Says Hindenburg Report Constitutes 'Securities Fraud' Under Indian Law

Adani Group said that Hindenburg 'conveniently ignored the Indian judiciary and regulatory framework'.

<div class="paragraphs"><p>Signage of Adani Group in Mumbai, India, on Friday, Jan. 27, 2023. Photographer: Indranil Aditya/Bloomberg</p></div>
Signage of Adani Group in Mumbai, India, on Friday, Jan. 27, 2023. Photographer: Indranil Aditya/Bloomberg

The Adani Group responded in detail to Hindenburg Research's accusations, alleging that the report of the U.S.-based firm is "unsubstantiated" and "misleading".

In a document running into more than 400 pages, a copy of which was reviewed by BQ Prime, the Gautam Adani-led conglomerate responded to the 88-questions raised by Hindenburg. It said the U.S. firm used the report to hold short positions in various listed companies of the Adani portfolio through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.

Adani Group Issues 413-Page Response, Calls Hindenburg Allegations Attack On India

The group questioned the "ulterior motives" and modus operandi of Hindenburg that, it said, has conveniently ignored the Indian judiciary and regulatory framework.

The Adani Group said there are three key themes from the Hindenburg report:

  • Selective and manipulative presentation of matters already in the public domain to create a false narrative.

  • Complete ignorance or deliberate disregard of the applicable legal and accounting standards as well as industry practice.

  • Contempt for the Indian institutions including the regulators and the judiciary.

Not one of the 88 questions raised is based on independent or journalistic fact finding, said the group's response. They are simply "selective regurgitations" of public disclosures or "rhetorical innuendos colouring rumours as fact", it said.

The group said Hindenburg has sought 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. It said that of the balance 20 questions, 18 relate to public shareholders and third parties (and not the Adani portfolio companies), while five are baseless allegations based on "imaginary fact patterns".

The Adani Group claimed that the Hindenburg report has been made with a clear intent to "profiteer at the cost of its 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", the group said.

It alleged 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".

Hindenburg had claimed to have undertaken a "2-year investigation" to "uncover evidence". The Adani Group said the report comprises 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 the country’s largest FPO," the company in the report.

The 413-page response from the Adani Group covers governance standards, credentials, creditworthiness, best practices, transparent conduct, financial and operational performance.

Read the full response of the Adani Group here:

Adani Response to Hindenburg - Jan 29, 2023.pdf

Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.