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Adani Group slams Hindenburg’s ‘attack on India’ as equity route hits $70bn

New Delhi

Adani Group has accused a US investment firm of launching “a calculated attack” on India by publishing a report alleging widespread fraud at the ports-to-power conglomerate.

Hindenburg Research released its report on billionaire Gautam Adani̵[ads1]7;s operations last week, accusing the group of “seed stock manipulation and accounting fraud scheme over decades.” It said it had taken a short position in Adani Group companies, meaning it would benefit from a fall in value.

Since the release of Hindenburg’s report, Adani’s business empire has lost more than $70 billion in market value. The infrastructure magnate’s net worth has also fallen by about $30 billion, according to the Bloomberg Billionaires Index.

He remains Asia’s richest man with a personal fortune worth over $92 billion, which is $10 billion more than Indian entrepreneur Mukesh Ambani.

Adani Group had already condemned the Hindenburg report as “baseless” and “malicious” in its initial response hours after the report’s release, and said on Thursday it was considering legal action. It followed on Sunday with a long and angry rebuttal of over 400 pages, in which the called Hindenburg’s claims “baseless and discredited” and said the research firm had an “ulterior motive.”

“This is fraught with conflicts of interest and intended only to create a false market for securities to enable Hindenburg, an admitted short seller, to book massive financial gain through improper means at the expense of countless investors,” it said.

The 60-year-old tycoon founded the Adani Group over 30 years ago and is seen as a close ally of India’s current prime minister, Narendra Modi.

Before the rout, which continued on the Mumbai Stock Exchange on Monday, markets had cheered for the businessman and his breathless pace of expansion. Investors were banking on the self-made industrialist’s ability to grow his businesses in sectors that Modi had prioritized for development.

In its detailed response on Sunday, Adani Group portrayed the US short seller’s report as an “attack” on India, its economy and investors.

“This is not just an unwarranted attack on a specific company, but a calculated attack on India, the independence, integrity and quality of Indian institutions, and India’s growth history and aspirations,” it said.

Hidenburg had concluded his report last week with 88 questions to the Adani Group. These ranged from asking for details about the group’s offshore units, to why it has “such a complex, interconnected corporate structure”.

The Indian conglomerate called these questions “rhetorical allusions that color rumors as fact.” It then sought to answer them, publishing some tables and charts to support its position.

The lengthy rebuttal sought to reassure investors about the group’s debt, banking relationships and corporate governance practices. Shares in Adani Enterprises, the group’s flagship, rose more than 4% on Monday, but most Adani shares extended last week’s losses.

The conglomerate’s chief financial officer Jugeshinder Singh compared the Indian market reaction to one of the most horrific events from the country’s colonial past under British rule.

“In Jallianwala Bagh only one Englishman gave an order and Indians were shooting at other Indians. So am I surprised by the behavior of some other Indians? No, Singh told Mint Business Daily in an interview published on Monday.

On 13 April 1919, British Brigadier General Reginald Dyer ordered his soldiers to fire without warning on a peaceful protest by thousands of unarmed people in Jallianwala Bagh, a public garden. in the city of Amritsar. They stopped firing 10 minutes later as their ammunition ran out. The horrific incident is now known as the Jallianwala Bagh or the Amritsar massacre.

Hindenburg’s claims come at a sensitive time for Adani. He aims to raise 200 billion rupees ($2.5 billion) by issuing new shares in Adani Enterprises this month. The offer ends on Tuesday.

Hindenburg responded to Adani’s rebuttal by saying “fraud cannot be masked by nationalism.”

“The Adani Group has sought to conflate its meteoric rise and the wealth of chairman Gautam Adani with the success of India itself,” said a post on Twitter on Sunday.

Hindenburg went on to add that the group has ignored “every important claim we raised.”

“In terms of substance, Adani’s 413-page response included only about 30 pages focused on issues related to our report,” it said.

“The rest of the response consisted of 330 pages of court records, along with 53 pages of high-level financial information, general information and details about irrelevant corporate initiatives, such as how it encourages female entrepreneurship and the production of safe vegetables.”

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