Adani Group claims recent damning Financial Times report a success
Indian power port conglomerate Adani Group has strongly refuted the claims outlined in a Financial Times article published in March titled “Indian data reveals Adani empire’s dependence on offshore finance.”
The diversified Ahmedabad-based group, which has recorded phenomenal growth since 2012, has been in the crosshairs of global businesses since US short-term investment research firm Hindenburg Research released a damning report on January 25.
The report, which Hindenburg says is the result of a two-year investigation, accuses the conglomerate of having “Brash inventory manipulation and accounting fraud scheme.”
It claims that Adani Group Founder and Chairman Gautam Adani has amassed an estimated net worth of $120 billion, of which $100 billion was added in 2019-22″thanks in large part to the appreciation in the share prices of the group’s seven main listed companies, which rose by an average of 819% during this period.
Its listed companies largely deal in renewable energy, ports, maritime infrastructure, thermal power, gas, cement and fast-moving consumer goods such as basmati rice and edible oil. The group has also recently entered the media sector and acquired stakes in digital business news platform Quintillion Business Media and news media company NDTV.
The conglomerate lost $118 billion in the ten days following the publication of the Hindenburg report.
The allegations against Adani have highlighted the Gujarati tycoon’s close ties to Indian Prime Minister Narendra Modi, with news of the company taking on political overtones and the opposition Congress of India led by Rahul Gandhi hurling criticism at the party in power Bharatiya Janata, accusing Modi of crony capitalism.
Both Modi and Adani hail from the western Indian state of Gujarat and their ties were well-documented decades before the latter briefly became the world’s second-richest person last September.
Adani Group reacted strongly to the Financial Times publication in March.
“It is a deceptive and deliberate effort to attempt to paint the Adani family and the Adani Group in the worst possible light. In doing so, it reveals a willingness to be selective in the use of publicly available facts, lazy in its approach to understanding the disclosures your reporters have been directed to, and makes insinuations that are false and damaging,” said a spokesperson on behalf of the Adani Group.
On March 2, the Supreme Court – India’s supreme court – set up a six-member panel headed by a retired senior judge. The panel was tasked with assessing existing regulatory standards and making recommendations to protect investors’ interests in the wake of the Hindenburg revelations. Adani welcomed the decision, tweeting that “the truth will prevail.”
The Indian conglomerate objected to the Financial Times’ use of expressions such as “flows of money difficult to control”, “opaque investments abroad”, And “funds of uncertain provenance”. The spokesperson also cited publicly disclosed data on January 18, 2021 and January 23, 2021 as showing that “Adani Group promoters raised $2 billion through the sale of a 20% stake in Adani Green Energy Ltd (AGEL) to TotalEnergies of France (then Total Renewables SAS),” than the Financial Timeshad reported at that time, but “completely ignored in the article published on March 22.”
He added: “In October 2019, the promoters had raised $700 million through the sale of a 37.4% stake in Adani Total Gas Ltd. Again, the Financial Times chose to ignore this fact in its report, although it published the news at the time.
These funds, according to the statement, were reinvested by promoter entities to support the growth of new businesses and in holding companies such as Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd, Adani Transmission Ltd and Adani Power Ltd. The promoter entities have held substantial stakes in Adani companies, which have increased over time. Adani Group argues that it was through the timely use of funds received through the sale of shares that these entities were able to increase their investments.
“The Adani family has deployed its proceeds from the secondary sale to make additional purchases of AGEL stock and to support AGEL through a shareholder loan and other securities – all also in the public domain.”
“Did the Financial Times intentionally mix primary and secondary investments, and also entirely ignore a $2 billion secondary transaction, leading to a funding gap to support a preconceived thesis of ‘supposed round trip?’ said the spokesperson.
Adani Group accused the Financial Times of “contradict each other to create innuendos”, pointing to a paragraph in the March article that says, “most offshore shell companies providing FDI [foreign direct investment] to the conglomerate were revealed to be part of Adani’s “promoter group”, meaning they are closely related to Adani or his immediate family. Later, the article states: “Analysts said the money from obscure Mauritian entities was of concern as it was impossible to determine whether or not the funds had been ’round trip’.
“If the Financial Times agrees in the first paragraph above that the companies are part of the promoter group, then how can they validly be called obscure entities?” Adani’s spokesperson said.
He added, “We understand that the competitive race to demolish Adani can be enticing. But we fully comply with securities laws and do not obscure the ownership and financing of promoters. Through the creation of a misleading narrative, your story has created an impact on the reputation of Adani Group companies. »
One expert who has come to the defense of the Adani Group is Mark Mobius, a veteran fund manager and founder of Mobius Capital Partners. He suggested that concerns about Adani Group were exaggerated by Hindenburg Research, whose report was released Jan. 24 ahead of Adani Enterprises’ follow-up public offering on Feb. 8.
Speaking to India’s Business Today magazine, Mobius said: “My feeling is that everything about Adani was probably exaggerated by the Hindenburg group. They have their reasons why if you’re shorting you want all the bad clues out. But I don’t think Hindenburg’s reports were entirely accurate and targeted..”
Meanwhile, the Financial Times denied the Adani Group’s request to withdraw the article in a letter to the editor dated April 10. The newspaper’s spokesperson said: “The article is precise and prepared with care. We maintain our report.
The group will submit its report to the CS on May 2.