Billionaire Gautam Adani-led Adani group has issued a 413-page reply to a 106-page report by Hindenburg Research, saying the allegations levelled by the “Madoffs of Manhattan” are "nothing but a lie", and its report is neither “independent” nor “objective” or “well researched”.

The group accused New York-based Hindenburg of being an "unethical short seller", which will only gain from the subsequent reduction in the prices of shares. "Hindenburg took “short positions” and then, to effect a downward spiral of share price and make a wrongful gain, Hindenburg published a document to manipulate and depress the price of the stock, and create a false market."

The group says the allegations spread like fire, wiping off a large amount of investor wealth, and netting "a profit" for Hindenburg. The net result is public investors lose and Hindenburg makes a "windfall gain", it adds.

“The report seeks answers to “88 questions” – 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.”

Of the balance 23 questions, it says, 18 relate to public shareholders and third parties (and not the Adani portfolio companies), while the balance 5 are baseless allegations based on "imaginary fact patterns".

Calling Hindenburg an entity "without credibility or ethics", the Adani group says an entity sitting thousands of miles away has caused a "serious and unprecedented adverse impact" on its investors.

The group says 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.

On the allegations of the alleged involvement of the Adani family in round-tripping of diamond consignments, the group says all such matters have been closed by the Appellate Tribunal (CESTAT) in its favour. "This decision has been further confirmed by the Supreme Court itself twice over, a fact which has been deliberately ignored and concealed in the Hindenburg report (which contemptuously raises questions on the competence of the Appellate Tribunal with baseless claims that it has ignored evidence)."

The company said it has no obligation to respond to Hindenburg's "baseless allegations", though in the spirit of good governance, transparency to stakeholders and to avoid the false market, it has replied to “88 questions” raised in the report.

On the allegations related to Emerging Market Investment DMCC, a Mauritius-based company led by Gautam Adani's elder brother Vinod Adani, the group said Hindenburg falsely claimed that Emerging Market Investment DMCC gave a loan of $1 billion to Mahan Energen.

"The simple fact of the matter is that Emerging Market acquired the $1 billion “unsustainable debt” of Mahan Energen from its lenders for USD 100 as part of a resolution plant duly approved by the National Company Law Tribunal under the Indian Bankruptcy Code. These are mala fide attempts to question bona fide transactions, the details of which are fully disclosed and available in the public domain, to create doubt in the minds of our stakeholders and the public."

The Hindenburg report had alleged that Gautam Adani has amassed a net worth of roughly $120 billion, adding over $100 billion in the past 3 years largely through stock price appreciation in the group’s seven key listed companies, which have spiked an average of 819% in that period. “Even if you ignore the findings of our investigation and take the financials of Adani Group at Face Value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” the report stated.

The Indian conglomerate, however, says three key themes from the Hindenburg report are "selective and manipulative presentation" of matters that are already in the public domain to create a false narrative; complete "ignorance or deliberate disregard" of the applicable legal and accounting standards as well as industry practice; and "contempt for the Indian institutions", including the regulators and the judiciary.

It says the report has been put out with the admitted intent of Hindenburg -- which is holding short positions in various listed companies of the Adani portfolio through U.S. traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities -- to profiteer at the cost of its shareholders and public investors. "Hindenburg has not published this report for altruistic reasons but purely out of selfish motives and in flagrant breach of applicable securities and foreign exchange laws."

The group said its portfolio companies have successfully executed an "industry-beating expansion plan" over the past decade. While doing so, the companies have consistently de-levered with portfolio net debt to EBITDA ratio coming down from 7.6x to 3.2x. The group's EBITDA has grown 22% CAGR in the last 9 years and debt has only grown by 11% CAGR during the same period, it adds.

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