Adani Group plans Independent Audit of group companies
A US based research firm, Hindenburg Research recently published a report titled “Adani Group: How The World's 3rd Richest Man Is Pulling The Largest Con In Corporate History” accusing the Adani group of improper use of offshore tax havens and flagging concerns about high debt, leading to a massive sell-off of India-listed shares of the conglomerate's companies.
To counter these allegations, Adani Group is planning to hire one of the "big six" accounting firms to assess its corporate governance and audit practices which will be commissioned after the group's unit, Adani Enterprises Ltd, completes a follow-on public offering. The audit will include eight of the group's listed firms. The independent audit report will be presented to the board, and basis the findings, the matter be taken to the court if the board of Adani Enterprises decides so.
As per the research firm, their 2 year investigation reveal that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades. Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing. 5 of 7 key listed companies have reported 'current ratios' below 1, indicating near-term liquidity pressure. The group's very top ranks and 8 of 22 key leaders are Adani family members, a dynamic that places control of the group's financials and key decisions in the hands of a few. Publicly listed companies in India are subject to rules that require all promoter holdings (known as insider holdings in the U.S.) to be disclosed. Rules also require that listed companies have at least 25% of the float held by non-promoters in order to mitigate manipulation and insider trading. 4 of Adani's listed companies are on the brink of the delisting threshold due to high promoter ownership.
As per the Adani Group CFO, The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts and considering whether to take legal action against the New York-based firm.The Group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance.
Activist investors like Hindenburg typically take a short position in a listed company they believe is heavily overvalued and has poor or fraudulent business practices.
Click here to read the Hindenburg Research Report:
https://hindenburgresearch.com/adani/
