ALBAWABA — Most Adani Group firms continued slumping on Monday despite the Indian conglomerate’s 413-page rebuttal to allegations of fraud by short seller Hindenburg Research over the weekend.
The three-day nosedive that wiped out over $70 billion of market value from Adani Group firms was sparked by a report by the United States-based research company that accused the group of "brazen stock manipulation and accounting fraud scheme over the course of decades", among other issues.
While the broad selloff continued on Monday with Adani Total Gas. and Adani Green Energy falling 20 percent each, Adani Transmission sliding 15.23 percent, Adani Power and Adani Wilmar dropped 5 percent each at closing, traders were divided, as flagship Adani Enterprises Ltd. rose 3.93 percent, Ambuja Cements Ltd. climbed 1.64 percent, ACC rebounded 1.5 percent and Adani Ports and Special Economic Zone was up 0.64 percent.
The conglomerate said it was the victim of a "maliciously mischievous" reputational attack as it issued a response to Hindenburg's claims late Sunday.
"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 ambition of India," Adani said, adding 65 of Hindenburg’s 88 questions had been addressed in public disclosures.
The conglomerate also alleged that the Hindenburg report was driven by "an ulterior motive" to "create a false market in securities" that would allow the short seller to "book massive financial gain through wrongful means".
The group’s chief financial officer Jugeshinder Singh told CNBC-TV18 that he believed that Adani Enterprises’ follow-on public offering will be fully subscribed, calling Hindenburg’s report "simply a lie" and the timing of the report "malicious", but the offering remained subscribe at a mere 2 percent.
In a tit-for-tat Hindenburg responded that "India's future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation", while finding the substance of Adani’s response lacking focus on relevant issues.
"The remainder of the response consisted of 330 pages of court records, along with 53 pages of high-level financials, general information, and details on irrelevant corporate initiatives, such as how it encourages female entrepreneurship and the production of safe vegetables," the research group added.
While last week, owner Gautam Adani tumbled from third on the Forbes real-time rich list to seventh, on Monday, as his wealth dropped to $90.7 billion, he slipped four more spots.
The saga that threatens to weaken broader confidence in India, also revived longstanding investor concerns about Adani’s corporate governance.
"The risk-reward for Indian markets has just taken a turn for the worse, " Charu Chanana, a strategist at Saxo Capital Markets, told Bloomberg. "Foreign investor confidence has been dented and will take time to repair, so I would be rather cautious. India anyway started this year trading at a premium to other EMs, and the Adani saga has once again questioned whether that is justified."
