Hindenburg’s Report on Adani and Its Ramifications

Hindenburg Research has come up with a report on the Adani Group which clearly alleges that the Adani Group firms have been involved in financial window dressing and stock market manipulations. These are very serious allegations with huge consequences and repercussions for the Adani Group in particular and the Indian economy in general. The shares of the Adani Group companies are on free fall since the report has gone public. Not only this but the report has also negatively affected the sentiments and volatility in the Indian stock market and many other stocks have to bear the brunt as a result of negative sentiments in the market.
As was expected, the Adani Group has outrightly rejected the findings of the report calling it malicious and threatening Hindenburg Research with legal action. What is important is that Hindenburg Research has welcomed saying that they would like to be sued by the Indian conglomerate as this will enable them to get direct access to different reports relating to group companies’ affairs.



It should be noted that this report hit the Adani Group when it was in the midst of FPO which is now in the doldrums after retail investors remain away from the issue and chances are high that the issue mightn’t succeed the way it was expected before the report. It would not be easy for the Adani Group to navigate from here.

It should be noted that the short seller Hindenburg has taken a short position on Adani worth billions of dollars in value. What is interesting in this case is that the anchor investors are investing billions of dollars in the said FPO of Adani Group. And there is no doubt that the anchor investors must have gone through the due diligence and would never invest in Adani Group until and unless they are satisfied.

Considering the timing of Hindenburg’s report, the trading firm comes into suspicion however at the same time it is quite possible that it may be a whistleblower! Hindenburg Research has welcomed any legal actions by the Adani Group. This confidence of Hindenburg brings the Adani Group into question as well.

It should be noted that this report might be authentic as well as part of business and geo-political war. The chances of it being an authentic report and a war tool are equal as India would be going to poll in 2024 and parties with vested interests might have sponsored this report as they have been targeting big Indian businesses like Ambani, Adani, Tata, Mahindra and others. So, it is not as simple as it looks.

However, it is more important to see how Indian authorities respond to the situation. The fall of the Adani Group because of this result would be big enough to negatively affect the economic activities and the sentiments in the Indian Economy along with negatively impacting entrepreneurial activities in the economy. It should be noted that the Indian banking and financial sector has exposure worth billions of dollars in the Adani Group including SBI, LIC and ICICI Bank etc. So the situation is quite complicated. So it becomes essential for the regulators to take prudent steps to ensure that there is neither another Satyam Computers-like episode nor a conspiracy to hold down Indian firms.

It is the perception of the common man that the corporate indulges in window dressing of book accounts and sometimes other financial manipulations as well to suit their objectives and unfortunately, it has been found true in almost every case of wilful default and the number of wilful defaults (the list issued by RBI) is quite high. If anything like Satyam Computers happens in the case of the Adani Group, it would clearly have very grave ramifications for the Indian economy in general and the Indian stock market in particular as the retail traders might stay away from the stock market. It should be noted that the participation of retail traders was not very high till a few years back.

SEBI has already increased scrutiny of the Adani Group and many other government agencies would come into action as the details would come out. This is the need of the hour irrespective of how big the Adani Group is. The SEBI is entrusted with the job of protecting and safeguarding the interest of investors as well as keeping their trust intact to deepen the Indian stock market. It has taken a very long time to increase the participation of retail investors in the Indian stock market.

Rajeev K. Upadhyay

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