Adani Reply to Hindenburg PDF Summary
Dear readers, today we are going to share Adani Reply to Hindenburg PDF Download Free for all of you. As you may know that recently on 29th January 2023 Adani Group of one of India’s biggest businessmen Gautam Adani released a detailed report for Hindenburg Research Report. In which he has expressed all the things of his side.
Gautam Adani Group led by Indian billionaire Gautam Adani, Asia’s richest man, said last week’s Hindenburg report was aimed at enabling US-based short sellers to book profits without citing evidence Was. For Adani, the stock market meltdown has been a huge blow.
Gautam Adani, who had rapidly become the world’s third richest man in recent years, has now moved up to the seventh spot in the Forbes rich list last week. So friends, if you have liked this information and you want to get detailed information on this topic, then through this article you can download the given Adani Response to Hindenburg PDF.
Adani Response to Hindenburg PDF Download – Summary
I. A Note of Caution to Our Stakeholders :
We are shocked and deeply disturbed to read the report published by the “Madoffs of Manhattan” – Hindenburg Research on 24 January 2023 which is nothing but a lie. The document is a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive.
This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors. It is tremendously concerning that the statements of an entity sitting thousands of miles away, with no credibility or ethics has caused a serious and unprecedented adverse impact on our investors.
The mala fide intention underlying the report is apparent given its timing when Adani Enterprises Limited is undertaking what would be the largest ever further public offering of equity shares in India. This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and the ambition of India.
While we are under no obligation whatsoever to respond to these baseless allegations made in the report, in the spirit of good governance, and transparency to our stakeholders and to avoid the false market, we provide our responses to the Report as also the “88 questions” raised in the report.
There are three key themes from the Hindenburg Report:
- (i) Selective and manipulative presentation of matters already in the public domain to create a false narrative.
- (ii) Complete ignorance or deliberate disregard of the applicable legal and accounting standards as well as industry practice.
- (iii) Contempt for the Indian institutions including the regulators and the judiciary.
II. Unveiling Hindenburg,s Motives
The report has been put out with the admitted intent of Hindenburg (holding short positions in various listed companies of the Adani portfolio through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities) to profiteer at the cost of our shareholders and public investors.
Hindenburg has not published this report for any altruistic reasons but purely out of selfish motives and in flagrant breach of applicable securities and foreign exchange laws.
The truth of the matter is that Hindenburg is an unethical short seller. A short seller in the securities market books gains from the subsequent reduction in the prices of shares. Hindenburg took “short positions” and then, to effect a downward spiral of share price and make a wrongful gain, Hindenburg published a document to manipulate and depress the price of a stock, and create a false market.
The allegations and insinuations, which were presented as facts, spread like fire, wiping off a large amount of investor wealth and netting a profit for Hindenburg. The net result is that public investors lose and Hindenburg makes a windfall gain.
Thus, the report is neither “independent” nor “objective” nor “well researched”. The report claims to have undertaken a “2-year investigation” and “uncovered evidence”, but comprises nothing other than selective and incomplete extracts of disclosed information which has been in the public domain for years if not decades, attempts to highlight allegations which have since been judicially determined to be false, narrates as fact what is attributed to hearsay, rumours and gossip spread by unnamed sources such as “a former trader” or “touts” of a “close relationship”, questions the independence of the judicial processes and regulators in the nation, and selectively extracts statements devoid of their context and with no understanding of Indian law or industry practice.
It is telling that not one of the allegations is a result of any independent or journalistic fact-finding. The allegations and innuendoes made in the Hindenburg report are knowingly false. Hindenburg’s conduct is nothing short of a calculated securities fraud under applicable law.
III. The Shoe is on The Other Foot – Hindenburg’s Active Concealment
Ironically for an organization that seeks transparency and openness, nothing much is known about either Hindenburg or its employees or its investors. Its website alleges that the organisation has an experience that “spans decades” and yet appears to have been set up only in 2017.
Despite all its talks of “transparency”, Hindenburg has actively concealed the details of its short positions, the source of its own funding, who is behind them, the illegality underlying the synthetic structures by which they hold such positions, or the profit it has made by holding such positions in our securities.
IV. Our Response to The Allegations
Not one of these 88 questions is based on independent or journalistic fact-finding. They are simply selective regurgitations of public disclosures or rhetorical innuendos colouring rumours as fact. The report seeks answers to “88 questions” – 65 of these relate to matters that have been duly disclosed by Adani Portfolio companies in their annual reports available on their websites, offering memorandums, financial statements and stock exchange disclosures from time to time.
Of the balance 23 questions, 18 relate to public shareholders and third parties (and not the Adani portfolio companies), while the balance 5 are baseless allegations based on imaginary fact patterns.
Nonetheless, we have responded to all these questions, summarized below:
1. Disclosed, discredited and disproven allegations:
Allegations no. 1, 2, 3, 27, 28, 29, 30, 31, 72, 73, 74, 75, 76, 77, 78, 79, and 80 present no new findings and only dredge up allegations (in some cases from a decade ago) which have been judicially determined in our favour and have also been disclosed by us to our investors and the regulators.
By way of an example, there are multiple false narratives being created in relation to certain allegations concerning diamond exports, which matters have all been closed by the Appellate Tribunal (CESTAT) in our favour.
This decision has been further confirmed by the Supreme Court itself twice over, a fact which has been deliberately ignored and concealed in the Hindenburg report (which contemptuously raises questions on the competence of the Appellate Tribunal with baseless claims that it has ignored evidence).
2. Baseless allegations around transactions which are in fact, compliant with the law, fully disclosed and on proper commercial terms:
Allegations no. 9, 15, 19, 24, 25, 32, 33, 35, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 53, 54, 55, 56, 57, 58, 59, 60, 61, 81, 82 & 83 are again a selective regurgitation of disclosures from the financial statements of Adani entities to paint a biased picture.
These disclosures have already been approved by third parties who are qualified and competent to review these (rather than an unknown overseas short seller) and are in line with applicable accounting standards and applicable law.
In another instance (allegation 41 of the Hindenburg Report), they falsely claimed that Emerging Market Investment DMCC gave a loan of USD 1 billion to Mahan Energen. The simple fact of the matter is that Emerging Markets acquired the USD 1 billion “unsustainable debt” of Mahan Energen from its lenders for USD 100 as part of a resolution plan duly approved by the National Company Law Tribunal under the Indian Bankruptcy Code.
These are mala fide attempts to question bona fide transactions, the details of which are fully disclosed and
available in the public domain, to create doubt in the minds of our stakeholders and the public.
In fact, the mala fide intent of Hindenburg can be clearly seen from it suggesting structures that would not be in compliance with corporate governance. By way of example, a fully disclosed transaction (see allegation 61 of the Hindenburg Report) of Adani Enterprises Limited’s subsidiary with NQXT to pay a standard security deposit (a common feature under long-term take or pay contracts) for use of terminals has been questioned.
Hindenburg seems to suggest that NQXT (a corporate entity in its own right and subject to its own regulations)
should provide Adani Enterprises with long-term terminals for no charges at all – a transaction that would amount to providing a benefit to a related party without arm’s length terms.
3. Misleading claims around offshore entities being allegedly “related parties” without regard for applicable law and standards:
Allegations no. 4, 36, 37, 38, and 39 from the report are in reference to offshore entities. The queries make reckless statements without any evidence whatsoever and purely on unsubstantiated speculations without any understanding of the Indian laws around related parties and related party transactions.
4. False suggestions based on malicious misrepresentation of the governance practices in Adani’s portfolio:
Allegations no. 34, 62, 63, 64, 65, 66, 67, 68, 69, 70, and 71 use selective information to make insinuations, when in fact, the Adani portfolio has instituted various corporate governance policies and committees including our Corporate Responsibility.
A committee consisting solely of independent directors tasked with keeping the Board of Directors informed about the ESG performance of businesses. Our ESG approach is based on well-thought-out goals, commitments and targets which are independently verified through an assurance process.
An example of where the report exposes its motives is the question around “convoluted structures” and multiplicity of subsidiaries while failing to comprehend that in the infrastructure business, especially in a sprawling geography like India, most large corporates operate in a similar fashion because projects are housed in separate SPVs and these need to be ring-fenced from a lender perspective for limited recourse project finance and in many cases on account of specific regulatory requirements.
As an example, transmission projects in India are awarded under tariff-based competitive bidding, in such bidding, the successful bidder has to acquire the SPV which is undertaking the project. Hence, it is a regulatory requirement as part of the Electricity Act, 2003 and the regulations of the Central Electricity Regulatory Commission to execute projects in different SPVs.
5. Manipulated narrative around unrelated third-party entities:
Allegations no. 5, 6, 7, 8, 10, 11, 12, 13, 14, 16, 17, 18, 20, 21, 22, 23, 26 and 52 from the report seek information on our public shareholders. Shares of listed companies on Indian stock exchanges are traded on a regular basis.
The listed entity does not have control over who buys/sells/owns the publicly traded shares in the company. A listed company does not have nor is it required to have information on its public shareholders and investors. Hindenburg deliberately ignores Indian legal processes and regulations in their insinuations against us.
For instance, they have raised several questions about the offer for sale undertaken by Adani Green Energy Limited in 2019 while maliciously ignoring the fact that in India the process for OFS is a regulated process implemented through an automated order book matching process on the platform of the stock exchange.
This is not a process which is controlled by any entity and the purchasers are not visible to anyone on the platform.
6. Biased and unsubstantiated rhetoric:
Allegations no. 84, 85, 86, 87, and 88 from the report are inherently biased statements around our openness to address criticism with a window dressing to garb them as questions. Criticism does not include the right to make a false and defamatory statement which could damage the interests of our stakeholders.
We continue to have the right to seek judicial remedy before Indian courts when such interests are threatened, and in all cases, we have exercised these rights in due compliance with the law and the judicial process. Hindenburg has sought to spotlight selective media reporting while deliberately ignoring judicial findings.
For instance, in another twisting of facts, Hindenburg questions why we sought to have a “critical journalist” jailed. The fact of the matter is that he was never jailed in connection with any proceedings related to us and in fact, a non-bailable warrant had been issued to him by the judge because he failed to appear before the court despite summons and was not complying with the judicial process.
V. Our Commitment to the Highest Levels of Compliance and Continued Growth
We reaffirm that we are in compliance with all applicable laws and regulations. We are committed to the highest levels of governance to protect the interests of all our stakeholders. The Adani Portfolio also has very strong internal controls and audit controls.
All the listed companies of Adani Portfolio have a robust governance framework. The Audit Committee of each of the listed companies is composed of 100% of Independent Directors and chaired by an Independent Director. The Statutory Auditors are appointed only upon recommendation by the Audit Committee to the Board of Directors.
Adani Portfolio companies follow a stated policy of having global big 6 or regional leaders as Statutory Auditors.
The focus of the Adani portfolio and the Adani verticals is to contribute to nation-building and take India to the world.
We will exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities and we reserve our rights to respond further to any of the allegations or contents of the Hindenburg report or supplement this statement.
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