In a fresh salvo fired by the Adani Group ahead of the most crucial Monday trading session that could make or mar the Adani Enterprises’ Follow-on Offer (FPO), the group on late Sunday night came up with a ‘detailed’ response to Hindenburg Research report.
The Adani group has in its latest response termed the allegations by Hindenburg as “selective regurgitations of public disclosures or rhetorical innuendos colouring rumours as fact”.
The company says that of the 88 questions asked by the report, 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.
On many questions around related party and other transactions, the group in its response says that these transactions are “compliant with law, fully disclosed and on proper commercial terms”.
“These disclosures have already been approved by third parties who are qualified and competent to review these (rather than an unknown overseas shortseller) and are in line with applicable accounting standards and applicable law,” it further says.
It cited the question raised over a related party transaction between Adani Enterprises Limited and its subsidiary NQXT. It says “a fully disclosed transaction (allegation 61 of the Hindenburg Report) of Adani Enterprises’ 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, says the Adani Group, that NQXT (a corporate entity in its own right and subject to its own regulations) should provide Adani Enterprises 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.
On Hindenburg’s claims about offshore entities being related parties of the group without regard for applicable law and standards, the group in its response says that 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.
On questions raised over the governance practices in Adani portfolio, it says the group has instituted various corporate governance policies and committees including our Corporate Responsibility Committee consisting solely of independent directors tasked with keeping the Board of Directors informed about the ESG performance of businesses.
On the charges of share market speculation, it says that 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,” it added.
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On the allegations that the group company has engaged an unknown audit firm to audit its books, the group says that The Statutory Auditors are appointed only upon recommendation by the Audit Committee to the Board of Directors. Adani Portfolio company’s follow a stated policy of having global big 6 or regional leaders as Statutory Auditors.
The response from Adani comes as he, according to Reuters, faces a critical day on Monday with his flagship company's $2.5 billion share sale's second day of bidding overshadowed by a $48 billion rout in the billionaire's stocks which was sparked by US short seller's report.
Adani Group has earlier called the report baseless and said it was considering taking action against Hindenburg.