Hindenburg Research has released the findings of a 2-year investigation, claiming that Indian conglomerate Adani Group has been engaging in manipulation of stock prices and accounting fraud amounting to INR 17.8 trillion (U.S. $218 billion) over the course of decades. Additionally, the investigation has revealed that several key listed Adani companies have taken on major debt by pledging their shares of inflated stock for loans, leading to a precarious financial footing. Furthermore, 5 out of 7 key listed companies have reported their current ratios to be below 1, showing that their current liquidity situation is unsustainable.

The investigation has also revealed that family members of the Adani Group allegedly operated offshore shell entities in tax-havens such as Mauritius, UAE, and the Caribbean in order to generate forged import/export documents, fake or illegitimate turnover, and siphon money from the listed companies. In particular, Gautam Adani’s younger brother Rajesh Adani has been accused by the Directorate of Revenue Intelligence (DRI) of playing a pivotal role in a diamond trading scheme around 2004-2005. Moreover, the investigation has found that there are 38 Mauritius shell entities connected to Vinod Adani and his close associates. Entities connected to Vinod Adani have also been located in other jurisdictions such as Cyprus, UAE, Singapore and several Caribbean islands.

It was also established that to mitigate manipulation and insider trading, listed companies must have more than 25% of their float held by non-promoters. Unfortunately for Adani Group, the research concluded that it was (and may still be) a shareholder of several other Adani-owned entities, with offshore funds tied to the Adani Group representing much of the largest “public” (i.e. non-promoter) holders of Adani stock. If Indian securities regulator SEBI were to enforce their rules, the Adani companies would be subject to delisting. As reported by Right to Information (RTI) Requests filed with SEBI, the offshore funds connected to Adani Group are currently under investigation as well.

These are extremely serious accusations and it has caused Adani Group’s shares to dramatically decrease and may result in further repercussions. Only time can tell how this situation will unfold.


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December 2023