Hindenburg’s report also said five of seven key listed Adani companies have reported current ratios, a measure of liquid assets minus near-term liabilities, of below 1 which it said suggested “a heightened short-term liquidity risk”.
It said key listed Adani companies had “substantial debt” which has put the entire group on a “precarious financial footing” and that shares in seven Adani listed companies have an 85 per cent downside due to what it called “sky-high valuations”.
Adani’s response stated that over the past decade, its group companies have “consistently de-levered”.
Defending its practice on pledging shares of its promoters – or key shareholders – the Adani Group said that raising financing against shares as collateral was common practice globally and loans are given by large institutions and banks on the back of thorough credit analysis.
The group added there is a robust disclosure system in place in India and its promoter pledge positions across portfolio companies had dropped from more than 50 per cent in March 2020 in some listed stocks, to less than 20 per cent in December 2022.
“SAIL THROUGH”
The Hindenburg report, and its fallout, is seen as one of the biggest ever challenges facing the billionaire, whose business interests ranging from ports, airports, mining and power to media and cement.
Adani’s response included more than 350 pages of annexes that included snippets from annual reports, public disclosures and earlier court rulings.
Hindenburg, Adani said, had sought answers to 88 questions in its report, but 65 of them were related to matters that have been disclosed by Adani portfolio companies in annual reports.
The rest, Adani said, relate to public shareholders and third parties, and some were “baseless allegations based on imaginary fact patterns”.
Hindenburg, known for having shorted electric truck maker Nikola Corp and Twitter, said it holds short positions in Adani companies through US-traded bonds and non-Indian-traded derivative instruments.
Adani also responded to allegations by Hindenburg relating to the company’s auditors, saying “all these auditors who have been engaged by us have been duly certified and qualified by the relevant statutory bodies”.