Adani Group Clarifies on the Reports of Hiring Grant Thornton as the Auditor for the Hindenburg Chaos

Adani Group has recently denied the clarification for appointing Grant Thornton to conduct audits for the Gujarat-based conglomerate after the Hindenurg crisis. The flagship company of the Adani Group has called it a market rumor.

Adani Group has talked about the issue in the BSE filing that the news has been a rumor, and it would not befit the company to comment on the subject. The enterprises have further stated that the group would continue to talk about compliance with the obligations that have been presented under the Securities and Exchange Board of India based on the Listing Obligations and Disclosure Requirements Regulations that were imposed in 2015. The firm has made agreements with the Stock Exchange.

The Media reports have stated that the Adani Group has appointed the famous accountancy firm Grant Thornton for conducting an independent audit of a few of its companies. It was an attempt for the group to come clean after the allegations made by the Hindenburg group and to bring back the confidence of the investors and the regulators.

According to the reports, the audits will be inclined to the areas if there is any misappropriation or repatriation of the funds and if the loans were used for any other purposes than for what it has been issued.

The audits would be conducted to show that the project is executed right and the balance sheets of the Adani group are healthy- something that the investors are closely keeping an eye on as the damage to the market value made by the Hindenburg group is severe.

The market value of the seven listed companies of the Adani Group has declined by half since the Hindenburg report was released on January 24. The reports alleged Adani pulled out of the greatest market con in corporate history. 

A report from Hindenburg Research contained proof that the group had engaged in prolonged stock manipulation and accounting fraud schemes. The major publicly traded companies have taken on more debt, including by pledging shares as collateral for loans secured by rising stock prices, placing the entire group on unstable financial ground.

It has been reported that current ratios for five out of the seven listed companies are below 1, which indicates significant liquidity pressure. The richest man in Asia has lost 51.7 billion dollars in value in the last week as a result of the allegations made in the reports.

The ten Adani groups that are listed on the stock exchange have liabilities totaling 3.39 trillion rupees or 41.1 billion dollars. The QUICK FactSet was used to collect the data. ACC, Ambuja Cements, and New Delhi Television are the companies that increased the liability. Gautam Adani bought the three businesses from the previous year’s list.

The platform status of the Adani Group was changed by Moody’s Investors from stable to negative, as a result of the release of the Hindenburg report on the Adani Group. Although the Ba3 ratings have remained unchanged, Adani Green Energy’s (AGELrating) outlook has changed from stable to negative.

The outlook for Adani Transmission Station One and Adani Electricity has been downgraded to negative, and they are both part of the Adani Green energy-restricted group.

The ratings have changed as a result of the company’s capital expenditure plan and its heavy reliance on sponsor support, particularly in the form of subordinated debts or shareholder loans. According to Moody Analytics, the short-seller attack has put the Adani Group’s performance in doubt.

The Group has previously mentioned that in the fiscal year 2023, the group’s EBITDA ratio dropped from 7.6 times to 3.2 times.

In addition, the chaos has led many international banks to accept the bonds of the Adani Group as security for debts. The SEBI is closely scrutinizing the situation. The RBI expressed its worries and requested information from the banks regarding their exposures to the Adani group.

The Group has denied all the allegations made by Hindenburg Research and called the accusations malicious, baseless, and an attack on India. 

Adani Group has been considering independent evaluation to take control of the matter related to legal compliance, internal controls, and related party transactions according to the Hindenburg report. 

The Adani Group took the major defensive step:

The rumor of the appointment of the U.S.-based group was the first major step by the Adani Group to defend itself. The accounting firm Grant Thornton is the largest integrated assurance, and advisory firm in the U.S. as well as the world. 

After the emergence of the accusations on the Gujarat-based conglomerate, investors have been skeptical of the group, as seven of its listed subsidiaries have suffered a massive loss.

But, they have made it clear that they would undergo an independent audit as per the concerned authorities.

edited and proofread by nikita sharma