One of the biggest business conglomerates in the world, the Adani Group had been facing the worst days in their business after the investment research firm Hindenburg Research LLC submitted a report regarding the operations of the company for the past few years.
The report had a subsequent effect on the business of the world’s third richest man and information says that the share price of Adani’s different installments of his business empire like the Adani Ports and Special Economic Zones Limited and Adani Enterprises fell drastically.
While the share prices of the Adani Ports and Special Economic Zones fell about 7.25 percent, the share price of Adani Enterprises fell to 3.7 percent.
The release of Hindenburg Research’s report which is titled ‘Adani Group: How the World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History’ is pointed to as the reason behind the falling prices.
The report was published by the firm on January 24, 2023, and it was later shared on the social media platform Twitter by the maker on January 25, 2023.
Before getting right into the details of the report and the response to the reports, here are some of the basic facts that you should know before.
Things To Know About Hindenburg Research
Hindenburg Research is an investment research firm that was founded by Nathan Anderson in 2017. The company analyzes different aspects of finance like equity, credit, and derivatives. One of the main focuses of the company lies in generating public reports that are intended to bring out alleged corporate frauds and malfeasance.
As per the website of company, they utilize their resources and skills to avoid man-made disasters like mismanagement, any irregularities in accounting, or problems involving undisclosed related-party transactions.
After the establishment of the company in 2017, the website claims that the company has pointed out potential mistakes in 16 different companies. Some of the companies that had been the subjects of their reports include Tecnoglass, Nikola, Kandi, Lordstown Motors, and many more.
What Does The Hindenburg Report Say About The Adani Group?
The most recent Hindenburg report published by the company on January 23, 2023, raises serious allegations against the Adani Group. The reports say that the Adani Group had been committing serious stock manipulation and accounting fraud.
They also say that Adani Group had been carrying out this process for over the course of decades. The actual word used in the report to describe the fraud committed by the Adani group is ‘brazen.’
The company is very confident in the report that they have published. They stated that the published report was the final result of extensive studies, analyses, and reviews. They also gather needed information by interviewing former employees of the Adani Group.
The report also goes back to the history of the Adani Group and goes on to mention that the Adani Group had been the prime focus of four different government fraud investigations. The charges accused against them include theft of taxpayer’s funds, corruption, and money laundering. The report also highlighted the name of Gautam Adani’s elder brother Vino Adani.
Vinod Adani was found to be the prominent figure in almost all government investigations aimed at the Adani Group. The allegations stated in the reports are very strong and the company claims to have sourced the information needed to arrive at those conclusions from credible sources.
How Has The Hindenburg Report Affected The Adani Group?
After the report was published on January 24, 2023, it was published on Twitter by the company the next day, making it accessible to the public. With such high allegations raised against the Group, the effect was very clear in their stock values after that.
The shares of Adani Enterprises, which is the most important venture of the Adani Group, fell drastically. As of Wednesday, the company was down more than 3 percent to $40.77 (Rs. 3,333), while the Adani Ports were down by more than 6.5 percent.
Similar was the case with other companies of the group. Adani Green Energy reported a drop in their stock of nearly 3.55%, Adani Total Gas around 4.77%, Adani Wilmar around 5%, Adani Power around 4.7%, and Adani Transmission around 5.19%.
The report has also affected the company’s share in India too. One of the major parts of Adani Group, the Indian news broadcaster New Delhi Television NDTV was down 5% while the other recent accusations of company Ambuja and ACC. which are both cement companies were 8% and 6.6% respectively.
Must Read:- Suze Orman: The Personal Finance Expert Telling The Hard Truths
How Has The Adani Group Responded To The Hindenburg Report?
Upon the publishing of the report which raised serious allegations against the Adani Group, the CEO of the Adani Group, Jatin Jaundhwala said in a statement that the claims and other allegations mentioned in the Hindenburg reported being ‘baseless.’
He also added that the research group which formulated the report was ‘maliciously mischievous and unresearched.’
As the allegations in the report are serious charges, Jatin Jaundhwala reported that the company is currently evaluating the relevant provided in both the United States law and the Indian law which can be used as a remedy against the damage caused by the report and also take action against Hindenburg, the publishers of the report.
Jatin Jaundhwala, the CEO of the company also added that the report had made a very adverse effect on the shareholders and investors of the company. Another important thing that was addressed by Jatin Jaundhwala was the Follow on Public Offering (FPO) by Adani Enterprise which was set to take place on Friday.
The FPO was reported to be the biggest of its kind in the history of India. Jatin Jaundhwala stated strongly that the publishing of the report just days before the event without contacting the company can only be seen as a move to damage the reputation of the company and also to damage the upcoming Follow-on Public Offering, of around $2.45 billion.
Even though there had been no other legal moves from Adani Group against Hindenburg Research, the report has adversely affected the price of the company and also has resulted in the loss of billions.
Gautam Adani has also reportedly lost his status as the third richest man in the world, owing to the sudden decline in his share values.
Read More:- Lockheed Martin Corporation: Reshaping The U.S. Defence Industry