Hindenburg, which said it charred through two years on its investigation, guaranteed that the Adani Gathering had “taken part in a bold stock control and bookkeeping misrepresentation plot throughout the span of many years”. Among its claims was that a relative of Adani utilized seaward substances to launder cash into the gathering’s recorded organizations, adding to their “high as can be valuations” after a flood in stock costs throughout the course of recent years. Hindenburg likewise addressed what it said were high measures of influence in the gathering’s elements. Jugeshinder Singh, the gathering’s CFO, dismissed Hindenburg’s cases as “a pernicious mix of specific falsehood and flat, outlandish and ruined claims”.
Dozens of shell firms are controlled by Gautam Adani’s elder brother Vinod Adani or close associates in tax havens. These firms seem to serve several functions, including stock manipulation and laundering money independent auditor for Adani Enterprises and Adani Gas is a ‘virtually unknown firm’. Adani firms have taken on substantial debt; putting the entire group on precarious financial footing. Asia’s richest man considers legal action over short seller’s ‘baseless’ fraud claims.
With the Adani Gathering’s inclinations traversing from weighty industry to media and its situation as a main corporate business and citizen the test of the gathering’s uprightness is huge for India Inc and its monetary business sectors, controllers and lawmakers. It comes as Adani has set out on an aggressive worldwide development, enrolling worldwide accomplices and financial backers to back the gathering. 90–95% of the Adani group of stocks is owned by three Foreign institutional investors registered in Mauritius and they are willing to buy every share that is sold in the Indian equities market that’s what led to the surge in their prices also, the financials of the Adani group do not support the sudden surge and that’s exactly why the irregularities were snooped upon.
Now, three individual FPI accounts holding 43,000 crore worth of Adani stocks have been frozen on non-compliance with the regulators on KYC details and documentation. As a result, some internal operatives are trying to rig the prices of stocks and hence the regulators have taken action against the Adani group. Consider that most of the wealth was built in the past three years, with 85% being accumulated in that time frame. It’s crucial to understand the source of this wealth and its potential impact on the company and infrastructure. Despite the recession and market struggles in 2020, wealth has still grown significantly, primarily due to the rising stock market, as shown in the report by Hindenburg. The report reveals that USD 120 billion in wealth has been created, with over USD 100 billion added in the last three years, largely due to the rapid appreciation of stock prices.
If we look at the current ratios of all the Adani Group companies, the majority of them have a negative current ratio, meaning their current liabilities are greater than their current assets. Hindenburg Research also pointed out that the company management of Adani Enterprises may have been involved in unethical practices in the past. For example, Rajesh Adani, the current managing director, has a history of jail time for fraud and tax evasion, which is a concerning sign. It’s important to note that the legal status of these claims should be evaluated by a legal expert. Hindenburg Research has raised 88 questions and the Adani Group has not provided any answers, leading to concerns and potential suspensions for the companies.
There are several reasons. First is the operation of natural law, that which goes up has to come down and that which goes up fast comes down faster. Second, Adani became the third richest billionaire in the world with a small-town mentality. He kept on his rolls his old Chartered Accountant with a small set-up in Ahmedabad and didn’t hire anyone from Big Four. Similar practices were not conducive to his newfound fame.
We can also assume that Adani became a victim of political power play. The opposition politicians, who welcomed him to their states, used him to get at Modi as they could not get any political ground to hurt Modi. They forgot that Adani was earlier sponsored by them too. Fourth, when Adani went on acquiring companies through hostile takeovers like NDTV, he made many enemies and many mistakes. All his enemies were rooting for him and waiting for an opportunity. They got one when the Hindenburg Research Group report came.
