Following a damning analysis of its operations by a U.S. short-seller, disclosures on Tuesday indicated that Adani Group is exploring an independent assessment of its internal controls, related party transactions, and legal compliance issues.
After Hindenburg Research claimed on January 24 that the group had engaged in stock manipulation and utilized tax havens, the market has been in a state of upheaval for days, which has affected the group.
The charges have been refuted by Adani Group, which asserts that it conforms with all regulations and has made all essential disclosures over time. Nevertheless, when worries about a financial crisis intensified, investors sold off its shares.
Three Adani divisions — Adani Green Energy, Adani Ports and Special Economic Zone, and Ambuja Cements — disclosed their quarterly earnings and mentioned that a short seller had claimed 'some concerns against several' Adani group entities, indicating for the first time that they may be investigated.
Without elaborating, Adani Green stated in its quarterly earnings filing that 'the management of Adani group entities are evaluating an independent assessment, based on the necessary corporate approvals, to look into the issues and compliance of applicable laws and regulations, transaction-specific issues.'
While Ambuja's petition was comparable, Adani Ports stated that, if necessary, it would consider an impartial evaluation of the situation.
The announcement comes as Adani Group's stock surged on Tuesday, a day after it redeemed some loans, providing comfort to investors who have seen the conglomerate's market value plummet by $113.6 billion since the publication of the Hindenburg Research study two weeks ago.
For 60-year-old Adani, whose wealth rose in recent years along with his stock prices until the Hindenburg shock, the problem is one of his toughest reputational challenges. The market collapse also caused the tycoon to postpone a crucial $2.5 billion share sale last week, which was a big loss for him.
Adani Group announced on Monday that it would pay $1.11 billion in loans on shares early. Separately, JPMorgan stated on Tuesday that its group firms continued to qualify for participation in its bond indexes.
Adani Enterprises Ltd., the group's flagship company, ended Tuesday with a 14.6% gain, which is still only half of what it was before the publishing of the Hindenburg report.
Despite Adani Ports and Adani Wilmar both posting gains on Tuesday, the combined losses of the Adani group's seven publicly traded entities remain at $109 billion.
This week, results from many Adani Group firms are being reported. Tuesday saw Adani Ports report a reduced quarterly profit as foreign exchange losses increased. The company also announced it would repay 50 billion rupees ($605 million), or 13% of its net debt, in the upcoming fiscal year beginning in April.
Adani Green announced a quarterly profit increase of more than double.
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