How is Adani Group fighting the Hindenburg narrative
What's the story
Adani Group, the once high-flying conglomerate, has been fighting a damning report by Hindenburg Research over the past few months. In fact, Gautam Adani's empire lost about $140 billion in valuation owing to the report. However, the group has been fighting the accusations in a multitude of ways, including re-evaluating projects based on cash flow and availability of finance.
Context
Why does this story matter?
The Hindenburg report accused the Adani Group of accounting fraud and stock manipulation. It also brought attention to the conglomerate's sky-high debt. The allegations resulted in massive selling pressure on the group's stocks. Since then, Adani Group has been trying to rebuild investor confidence. Now, the conglomerate's multi-pronged strategy to claw back to where it was before the report is still taking shape.
Projects
Adani Group suspends petrochemical project in Gujarat
Adani Group wants to rebuild its credibility with jittery investors and lenders. For that, it has reportedly decided to press pause on some projects. One among them is its petrochemical project at Mundra in Gujarat. The Rs. 34,000 crore project aims to set up a greenfield coal-to-PVC plant on the land owned by Adani Ports in the Kutch district of Gujarat.
Petrochemical
Conglomerate re-evaluating some projects
Adani Group's flagship company Adani Enterprises had incorporated Mundra Petrochem Ltd., a wholly-owned subsidiary, for the project. It has now asked everyone involved in the project to "suspend all activities" until further notice. "Based on future cash flow and finance, some of the project/s are being re-evaluated for its continuation and revision in the timeline," the group said in a mail to various parties.
Debts
Adani Group on debt offensive
To address concerns about its debt, Adani Group is pursuing an offensive debt strategy. By repaying and prepaying its debts, the group aims to win back its supporters. The conglomerate has reportedly prepaid $2.15 billion worth of margin-linked share-backed loans due before March 31. The group has also prepaid a $500 million loan availed to finance the acquisition of Ambuja Cements.
Prepaid
Adani Group suspends debt-fueled, fast-paced growth
The group has repeatedly denied the allegations leveled by the Hindenburg report, calling it "malicious," "baseless," and a "calculated attack on India." However, actions almost always speak louder than words. By repaying debts, the group showcased that it is not in any financial distress. The conglomerate's decision to suspend its debt-fueled growth for slow and steady growth should also appease investors.
Roadshows
Adani Group conducted roadshows to win back investor confidence
Adani Group's fight against Hindenburg Research also included roadshows across the world. It started with roadshows in Singapore and Hong Kong. The conglomerate then took the action to Dubai, London, and several cities in the United States (US). These roadshows are aimed at propelling investor confidence in the group. It is unclear whether there will be more roadshows in the future.