The Hindenburg Research, a forensic financial research firm founded in 2017 by Nathan Anderson, has claimed fraud and wrongdoings in the Adani group’s shareholding. Hindenburg Research is one of the most promising firms famous for placing bets against various companies and tracking corporate fraud. Consequently, the one and only Adani Group, holding more than $220 billion net worth, has seen a huge setback.
Adani group has postponed its $2.5 billion share sale after seeing the dramatic downfall in the share market once the market opened on Friday.
But why has Hindenburg criticised the Adani Group? It has claimed that the Adani Group has been involved in inaccurate use of tax havens which can raise a concern about debt level in the future.
Has Adani Group Responded to The Hindenburg Claim Yet?
Once Hindenburg published its report on January 24th, global investors started to show disbelief in the Indian billionaire. As a result, the Adani Group has seen a huge setback during the past few days. Of course, the Adani Group has responded to the recent setback stating the report is baseless. They also added that the allegations are nothing but unsubstantiated speculations.
However, as the days passed, the Adani Group Chairman, Gautam Adani, realised that his empire was now under scrutiny, and he claimed to give the shareholders their money back.
What Has Hindenburg said about Finance?
Besides accusing the Adani Group of fraud within the company, it has accused the company of making some big changes during the past few years. It stated that the companies of Adani Group had seen some changes in the number of chief financial officers and auditors. The firm has used this as a key point to raise the financial issue within the company.
However, the Adani Group has responded to this allegation. It has stated that many CFOs remain in the companies. However, they have moved on with their new roles. It has also been said that the audit committee of the Adani Group companies are assigned by independent directors based on the recommendations.
What Does Hindenburg Think of The Adani Leverage?
Hindenburg firm has pointed to the potential risk faced by the Adani Group. It has been mentioned that the companies of the Adani Group have substantial debt and have been running liquidity risk because of short-term liabilities.
According to Hindenburg, five of the Adani companies have a current ratio of below 1, indicating the severe debt risk and amounting pressure on the companies.
As Hindenburg made his statement and claimed the possible risk of the Adani Group, the billionaire chairman responded quickly. He said the leverage ratio of all the Adani Group companies has been robust and going smoothly. They are in line with the requirements of the respective sectors. He also claimed that the information is currently open to the public, and they continue to do so regularly.
What Is The Impact of The Stock Market Crash on Adani Companies Followed by the Hindenburg Report?
After the sudden ground-shaking report of Hindenburg, the stock belonging to the Adani Group has been hit severely. Its various sectors, renewable oil, ports, airports, mine, etc., have seen a severe hit. According to some reports, the total net worth of Adani Group has come down to twenty-five per cent. However, two companies of the Adani Group, ACC and Ambuja Cements managed to survive the crash.
ACC is up by 1.8% at 1,877.55, and Ambuja Cement has rallied over 3%. Many have been surprised to see how these two integral parts of the Adani Group have survived the sudden stock market crash. But this happened after the publication of the Adani Group reports. It stated, “We would like to clarify that none of the shares of Ambuja or ACC has been pledged by promoters. The promoters have only provided a non-disposal undertaking; accordingly, there is no requirement to provide any top-up shares of Ambuja and ACC.”
Amidst all the rumours that ACC and Ambuja cement’s shares are pledged to the promoters, the conglomerate claimed the news was a ”misleading” one. But, of course, the statement weighs because when all of Adani Group’s companies desperately needed help, ACC and Ambuja Cement showed some serious survival skills.
But let’s face it. This huge stock market crash has shown a 25% fall in Adani Group. That is why it is reported that Adani has been trying his best to assure the investors so they refrain from dumping the company stocks. In a video message, Adani declared that their balance sheet and assets are healthy and robust. Their EBIDTA levels and cash flow have also been strong. “We have an impeccable track record of fulfilling our debt obligations,” Adani said. “We will continue to focus on long-term value creation, and internal accruals will manage growth.”
But the company had to do some calculations. That is why Adani Enterprise withdrew around $2.5 billion FPO, promising to return the money to the investors.
The Adani Group, expanding to various sectors like ports, airports, mines, renewables, power, etc., has accused the Hindenburg gravely of making false claims. It stated that it was a direct attack on India. The group has also remembered to put its focus on how an activist short seller profits from the falling share market price.
With all these things happening behind the curtain, one question is being raised, how will Adani Group manage to run Australia’s rail project in Queensland and the Carmichael coal mine? Can it raise the capital necessary for running these two prestigious projects?
But Reuters has reported that Adani Group has made scheduled payments on outstanding bonds on Thursday. It makes us remember what Mr Adani has implied recently: they have an impeccable debt payment record.
However, this is something that will not be forgotten so easily. In the meantime, the opposition party has already started showing suspicion of the possible danger in the business sectors due to the stock market crash. Some have also accused Adani of sharing a personal bond with the Indian Prime Minister Narendra Modi. The Ahmedabad Based entrepreneur, however, has firmly stated that no individual has ever been responsible for his success. But the opposition party is still calling for a Parliamentary debate on this matter.
The sudden Hindenburg report has come as a shock to the Adani Group. There is no doubt about it. However, it has been well aware of the damage it had to face during the past few days. What will happen is yet to be known in the coming days.