The embattled Adani Group is considering appointing independent firms to evaluate compliance and regulatory issues after short-seller Hindenberg Research raised questions over its business disclosures. The report resulted in the flagship firm withdrawing its follow-on public offer and other listed firms losing nearly half of their market capitalisation.
On Tuesday, the quarterly earnings disclosures of Adani Green Energy, Adani Ports and Special Economic Zone and Ambuja Cements said a short-seller had alleged “certain issues against some”group entities.
This is the first time since the allegations that the group firms have said they may be looked into.Ambuja Cements said the managements of group entities are considering appointing independent firms or agencies to assess the issues and compliance of applicable laws and regulations, related party transactions and internal controls among others. “While the management is confident that no material adverse impact on the financial results is likely to arise on completion of such evaluation, management will assess the necessary actions required, if any,” the company said.
It added that this is to uphold the principles of good corporate governance.A similar statement was issued by Adani Green, which along with its quarterly earnings report, said the group management is evaluating an independent assessment. It will also look into the issues and compliance of applicable laws and regulations, but did not elaborate on the issues.
According to Adani Green Energy MD & CEO Vneet S Jaain, the company’s performance demonstrates the resilience of its business model, which is supported by a robust capital management programme with leverage that is well-aligned with the business model.“We appreciate that in the last few days, this has further been reaffirmed by the rating agencies, equity and credit research analysts and various banks, financial institutions, long term investors and other key stakeholders have also reassured their confidence in AGEL’s strong business model,” Jaain said.
Adani Ports and Special Economic Zone also said it would conduct an independent assessment on the matter, if required.The combined market capitalisation of Adani Group firms, which had lost nearly `9.4 trillion in the previous eight trading sessions after the Hindenburg Research report, gained Rs 10,000 crore on Tuesday. Adani Enterprises, the flagship company, gained the most at 14.6%.
The recovery in Adani shares was attributed to the pre-payment of loans by the promoters. On Monday, Adani Group companies said they would pre-pay loans of up to $1.11 billion for the release of pledged promoter shares of some of its listed entities before the maturity date of September 2024. The group said this would be done “in light of recent market volatility and in continuation of the promoters’ commitment to reduce the overall promoter leverage”
.On January 24, US-based Hindenberg Research released a report outlining numerous issues of suspected fraud at the Adani Group, the second-largest conglomerate in India run by the world’s then-third richest man. Later, Adani released a 413-page response denying all allegations and terming Hindenberg as ‘Madoffs of Manhattan’.