Hindenburg to Adani: Fraud cannot be obfuscated by nationalism
What's the story
The back and forth between Hindenburg Research and Adani Group continues. Hours after the Indian conglomerate released a detailed rebuttal against allegations of stock manipulation and accounting fraud by Hindenburg, the US-based short seller responded by saying, "fraud is fraud."
Adani Group had claimed that the report by the activist investment firm was a "calculated attack on India."
Context
Why does this story matter?
The allegations leveled by Hindenburg Research in its report are not going to leave Adani Group anytime soon. After the report came out last week, the group's market capitalization declined by over Rs. 4.2 lakh crore.
It has led to a sense of panic around Adani Group stocks. The report has also stolen the limelight from Adani Enterprises' Rs. 20,000 crore FPO.
Hindenburg's response
Adani Group is trying to shift the focus: Hindenburg
In its response to the Adani Group's 413-page rebuttal, Hindenburg Research said that the conglomerate "predictably tried to lead the focus away from substantive issues and instead stoked a nationalist narrative."
"In short, the Adani Group has attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself," it added.
India
'India's future is being held back by the Adani Group'
Hindenburg criticized Adani Group's attempt to portray its report as an attack on India.
"We believe India is a vibrant democracy and an emerging superpower with an exciting future. We also believe India's future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation," the short seller said.
Questions
Hindenburg said that Adani Group's responses 'largely confirmed' its findings
In its rebuttal, Adani Group answered all 88 questions raised by Hindenburg. The short seller, however, said that the conglomerate failed to specifically answer 62 out of the 88 questions.
"Of the few questions it did answer, its responses largely confirmed our findings," it said.
The firm added that the Adani Group failed to "substantively address the issues raised."
Shell companies
Adani didn't refute existence of relationship with offshore entities: Hindenburg
Hindenburg had raised questions about Adani Group's dealings with offshore shell companies located in various tax havens. Per the report, these entities are either directed by or associated with Gautam Adani's brother Vinod Adani.
In its response to Adani's rebuttal, Hindenburg said that the conglomerate "did not seem to dispute the existence of these transactions and made no effort to explain their obvious irregularities."
Twitter Post
Here is Hindenburg Research's reply to Adani Group
Our Reply To Adani:
— Hindenburg Research (@HindenburgRes) January 30, 2023
Fraud Cannot Be Obfuscated By Nationalism Or A Bloated Response That Ignores Every Key Allegation We Raisedhttps://t.co/ohNAX90BDf
Stocks
Adani Group stocks suffer for the third consecutive day
Monday was expected to be a crucial day for Adani Group stocks after suffering a massive sell-off last week owing to the Hindenburg report.
Adani Enterprises' shares rallied at the beginning of the intra-day trade after Adani Group's detailed rebuttal but have gone down since then.
Adani Green Energy is down 18%, while Adani Transmission and Adani Total Gas have fallen by 20%.
Background
Hindenburg v/s Adani Group: The story so far
Last week, Hindenburg published a report accusing the Adani Group of market manipulation with the help of offshore shell companies and accounting fraud.
The activist investment firm also raised suspicions about the conglomerate's high debt and the sky-high valuations of its listed companies.
Adani Group came out with guns blazing, with its legal head calling the report "maliciously mischievous."