India’s Adani Group is considering independent evaluation of issues relating to legal compliance, related party transactions and internal controls following a US short-seller’s critical report on its businesses, disclosures showed yesterday.
The group, led by billionaire Gautam Adani, has been roiled by days of market turmoil after Hindenburg Research on January 24 alleged it had engaged in stock manipulation and used tax havens. It also said the group had unsustainable debt.
Adani Group has denied the allegations, saying it complies with all laws and has made necessary disclosures over time. Nonetheless, investors dumped its shares as concerns of financial contagion grew.
The quarterly earnings disclosures of three Adani units – Adani Green Energy, Adani Ports and Special Economic Zone and Ambuja Cements – noted that a short seller had alleged “certain issues against some” Adani group entities, saying for the first time they may be looked into.
“The management of Adani group entities are evaluating an independent assessment, basis the requisite corporate approvals, to look into the issues and compliance of applicable laws and regulations, transaction specific issues,” Adani Green said in its quarterly earnings filing, without describing the issues.
While Ambuja’s filing was similar, Adani Ports said it would evaluate an independent assessment on the matter, if required.
The disclosure comes as shares of Adani Group rallied yesterday, a day after it prepaid some loans, bringing relief to investors that have seen $113.6 billion wiped off the conglomerate’s market value since the Hindenburg Research report two weeks ago.
The crisis is one of the biggest reputational challenges for 60-year-old Adani, whose fortunes surged in recent years along with his stock prices, before the Hindenburg jolt. In a major setback for the billionaire, the market rout also forced him to shelve a key $2.5bn share sale last week.
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