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Hindenburg Report on Adani – Here’s What You Need to Know

Hindenburg Research, a US short seller, published a report on Adani Group on January 24, accusing it of improper use of offshore tax havens and raising concerns about high debt,...

Hindenburg Research, a US short seller, published a report on Adani Group on January 24, accusing it of improper use of offshore tax havens and raising concerns about high debt, which caused the Group’s stocks to crash. The group owns stock in Adani Group companies. According to Hindenburg Research, there is evidence that the Group has engaged in a “brazen stock manipulation and accounting fraud scheme over decades.”

Why In The News?

  • Adani Group Has Issued Multiple Statements Criticizing The Hindenburg Research Report, Which It Termed As Baseless And Malicious. It Also Questioned The Timing Of The Report, Released Just Days Ahead Of Adani Enterprises’ Rs 20,000 Follow-on Public Offering (FPO).
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What Is Hindenburg Research?

  • Founded In 2017 By Nathan Anderson, Hindenburg Research Is A Forensic Financial Research Firm Which Analyses Equity, Credit, And Derivatives. The Firm Claims That It Looks For “Man-Made Disasters,” Such As Accounting Irregularities, Mismanagement, And Undisclosed Related-Party Transactions.
  • The Company Invests Its Own Capital. It Was Named After The High-Profile Disaster Of The Hindenburg Airship In 1937 Which Ignited As It Flew Into New Jersey. After Finding Potential Wrongdoings, Hindenburg Usually Publishes A Report Explaining The Case And Bets Against The Target Company, Hoping To Make A Profit.
  • Hindenburg Has Flagged Potential Wrongdoing In At Least 16 Companies Since 2017, According To Its Website. Last Year, It Took A Short And Then A Long Position At Twitter Inc.
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The Curious Case Of Adani

  • Hindenburg Research Last Week Disclosed Short Positions In India’s Adani Group, Citing Potential Stock Manipulation And Accounting Fraud. The Allegations Sent Bonds And Shares In The Conglomerate’s Companies Down.
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Adani Group vs Hindenburg: Timeline

  • The 106-Page Report Was Released On January 24, 2023, Raised Multiple Concerns About Adani Group Companies, Created Panic Among Investors Even As Adani Group Came Out With Multiple Statements Criticising The Report.
  • The Report Has Led To Sharp Erosion In The Valuation Of Listed Companies Like Adani Enterprises, Adani Wilmar, Adani Power, Adani Total Gas, Adani Transmission, Adani Ports & SEZ, Adani Green Energy, ACC, Ambuja Cements, NDTV. The Total Market Capitalization Of Adani Group Listed Firms Have Fallen Over Rs 5 Lakh Crore In Just Three Trading Sessions.
  • Adani Group In An Initial Statement Termed The Report As Baseless And Malicious, Besides Questioning The Timing. Adani Group CFO Jugeshinder Singh Said That The Report Was Released Without Making Any Attempt To Contact Us Or Verify The Factual Matrix.
  • Adani Group Came Out With A Second Statement, Saying That It Was Considering Legal Actions With Relevant Provisions Under US And Indian Laws For Remedial And Punitive Action Against Hindenburg Research.
  • Hindenburg Research Said It Stands By The Findings Of Its Report And Said The Conglomerate Has Not Answered Any Of The 88 Questions It Had Asked In The Report. “Regarding The Company’s Threats Of Legal Action, To Be Clear, We Would Welcome It,” Hindenburg said.
  • Adani Group Released A 413-Page Report In Response To Hindenburg’s Report. It Said: “The Document Is A Malicious Combination Of Selective Misinformation And Concealed Facts Relating To Baseless And Discredited Allegations To Drive An Ulterior Motive”.
  • Hindenburg, However, Released Another Statement Where It Countered The Adani Group’s Statement By Saying: “Fraud Cannot Be Obfuscated By Nationalism Or A Bloated Response That Ignores Every Key Allegation We Raised”.
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The Effects Of Report Over Adani Enterprises

  • The Report Could Hurt The Sentiments Of The Adani Enterprises FPO, Which Is Open For Subscription Till January 31, 2023. While Adani Enterprises Stock Hit Its 10% Upper Circuit Briefly After The Adani Group CFO’s Statement, The Shares Retreated To Around 5 Percent Later In The Day.
  • Most Other Adani Group Companies’ Shares Slid Sharply, With At Least 4 Hitting Their Lower Circuit. Adani And Hindenburg Research Seem To Have Locked Horns As Both Continue To Issue Statements In Their Defence.
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