Shares of India’s richest man Gautam Adani’s companies fell heavily on Wednesday after American research group Hindenburg announced that it was selling its stake in the company. Hindenburg Research has released a report in which many serious allegations have been made against Adani Group.
It has been said in the report that the debt on Adani Group is very high, due to which there is doubt about the stability of its companies. This report says that Adani Group has also made undue use of countries considered as tax havens.
This report titled ‘Adani Group: How the World’s Third Richest Man is Pulling the Largest Con in Corporate History’ has been released just two days before January 27 when Gautam Adani’s company is about to issue secondary shares in the stock market. Through this, the group is expected to raise $ 2.5 billion, which will reduce some debt.
What is Hindenburg?
The American investment company Hindenburg Research has been established by an industrialist named Nat Anderson. The company claims to specialize in forensic financial research and has decades of investment experience. On its website, the company says, “We base our investment decisions on fundamental analysis, but we also believe in research based on information from unusual sources that are hard to find.”
Hindenburg Research has dropped the stock prices of many companies even before such actions. In 2020, it also sold its stake in American truck manufacturer Nikola and social media company Twitter, due to which the share prices of both the companies fell significantly. Since 2016, Hindenburg Research has published reports on dozens of such companies and exposed their alleged frauds.
The name of the company Hindenburg has also been kept for a special purpose. According to the website, it is based on a tragedy that was entirely avoidable. On 6 May 1937, a Hindenburg Airlines plane carrying about a hundred people had fallen victim to an accident in Manchester town in New Jersey, USA. 37 people had died in this incident.
Adani group was told the biggest fraud
Hindenburg in his report on Adani has raised serious questions on the activities of the group. It has been said in the report that Adani Group has used its companies formed abroad to save tax. The report alleged that there are several benami companies created in tax havens such as Mauritius and Caribbean islands that have stake in Adani’s companies.
It has also said that Adani has “huge debt” on companies listed on the stock exchanges which has put the entire group in a “untenable financial position”. The report said that due to “sky-high valuations” of seven listed companies of the Adani Group, their share prices are up to 85 per cent above their fundamental basis.
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Hindenburg says that his report has been prepared after two years of research and for this, along with former officials who worked in the Adani Group, many other people have also been talked to and many documents have been made the basis.
In the financial year ending March 31, 2022, the debt on Adani Group had increased by 40 percent to Rs 2.2 trillion. Data released by Refinitiv Group shows that the debt of seven listed companies of Adani Group is more than their equity. Adani Green Energy has 2000 percent more debt than equity.
What did Adani Group say?
Adani Group has given a sharp reaction to the report of Hindenburg Research. The company’s chief financial officer Jugeshinder Singh issued a statement saying the report was “a malicious mix of selective misinformation and baseless and unbelievable allegations.”
He did not respond to any of the allegations made in the report, but said that his company “always follows the law.” He questioned the timing of the report and said, “The coming of this report at this point of time is a brazen violation of the rule of neutrality and shows that Adani Enterprises’ public offering is being maligned with a malicious intent to malign the Adani Group.” Let’s do it.”
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After this report came, there was a big decline in the shares of many companies of Adani Group. Shares of Adani Transmission fell up to nine per cent. Shares of Adani Ports and Special Economic Zone declined 6.3 per cent while Adani Enterprises fell 1.5 per cent. Due to this report, there was a loss of $ 10.73 billion in the total market valuation of Adani Group.
Last September, Fitch Group had also issued a similar report regarding Adani Group in which questions were raised on its financial grounds. Although later he changed some figures but said that he is firm on his concerns regarding Adani Group.
Report: Vivek Kumar (Reuters)
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