Adani Group rejects Hindenburg allegations in notice to investors

The Adani Group dismissed concerns over its businesses being overleveraged in response to allegations by US-based short-seller Hindenburg Research that has seen the stocks of Adani companies nosedive in the past two trading days.

In a "notice to investors" in its follow-on public offer (FPO) on Saturday, Adani Enterprises (AEL) said it has "categorically denied all the allegations made in the report and considers the same to be misconceived and baseless."

The FPO will continue as per schedule without any changes in the price band, Adani Enterprises said separately on Saturday, quelling speculation about changes being made after a tepid investor reception on the first day of the issue, which runs January 27-31. The company aims to raise as much as ₹20,000 crore.

"All our stakeholders including bankers and investors have full faith in the FPO," an Adani Group spokesperson said Saturday. "We are extremely confident about the success of the FPO."

The company said that its red herring prospectus contained all relevant disclosures as required under local laws and no addendum was required to be published on account of the Hindenburg report.

The Adani Group said that 21 questions raised by Hindenburg on related party transactions and court cases involving it were nothing but public disclosures made by group companies from as early as 2015. This was in an 18-page presentation filed Friday evening with the bourses in response to the 88 questions raised by Hindenburg Research in its report on January 24.

Addressing allegations on accounting lapses, Adani said that out of nine of the group's listed companies, eight were audited by one of the "Big 6" leading global audit firms.

The Adani Group dismissed concerns of being overleveraged. It said in the presentation that about 100 of the companies that account for almost all of the group's ebitda were rated by 10 global and domestic rating agencies. The group's nine listed companies were all rated A and above by domestic rating agencies, it said, implying that the companies were in a financially sound position.

Meanwhile, overall promoter leverage was less than 4% of promoter holding, the presentation stated. Six of the listed companies were subject to sector-specific regulatory review, it said, addressing allegations of artificial inflation of revenues and manipulation of balance sheets.

In its January 24 report, Hindenburg Research had alleged that the Adani Group was involved in "brazen stock manipulation and accounting fraud scheme over the course of decades." The financial research firm also disclosed that it has taken a short position against Adani Group companies through US-traded bonds and non-Indian-traded derivative instruments.

Adani Enterprises is selling shares in the FPO at a price band of ₹3,112-3,276 apiece. The stock ended at ₹2,762.15 on the BSE Friday, down 18.5%.