Business Today magazine’s latest cover story explores how Gautam Adani’s empire has been battered and bruised by allegations of stock manipulation and fraud levelled by American short-seller Hindenburg Research. While Adani Group has denied all the allegations, the conglomerate’s stocks continue to plummet
· Brazen stock manipulation and accounting fraud schemes
· Substantial debt, share pledging and precarious financial footing
· Shell companies in Mauritius; round-tripping of funds
· Adani Group subject of four major government fraud investigations
- Rajesh Adani accused by DRI for alleged role in diamond trading import/export scheme
- Samir Vora accused by DRI in the same diamond trading scam
- Vinod Adani allegedly managed network of offshore entities to facilitate fraud
- Allegations made with mala fide intentions and lacks credibility, ethics
- Selective, manipulative, incomplete extracts of disclosed information
- Hindenburg aims to profit through short positions
- Diamond exports matter closed by CESTAT; order confirmed by SC
- Cases against Rajesh Adani, Vinod Adani and Samir Vora dismissed in group’s favour
- All related parties, transactions disclosed as per Indian laws
- Strong internal controls and audit controls in all group firms
- Prepaid $1.1 billion to release pledged shares
-Share pledges were due for maturity in September 2024
- Coupon payments on dollar-denominated bonds done on schedule
- Adani Group mulling independent assessment of its firms
- Assessment to look into compliance with all requisite regulations
- Highlighting strong guidance, cash flows in latest financial results
- FPO withdrawal will not affect existing business, future plans, says Gautam Adani
- Needs to strengthen balance sheet and reduce debt
- Could divest equity in group firms to raise funds
- Needs to review immediate growth/ expansion plans
- Markets to closely monitor loan repayments
- ESG, sustainability compliance needs to be prioritised
The market’s general assessment is that he will, but the bruise will last long and need special treatment. For one, Gautam Adani will need to get realistic about his ambitions- he has reportedly halved the growth target to 15-20 per cent for FY24 and might hold back on fresh capex for some time
The markets will have to pare expectations around the valuations of Adani stocks in the days ahead. Lenders and regulators too have to draw lessons from this saga to strengthen lending, surveillance and corporate governance practices