One of India's largest industrial groups is having a bad time

One of India’s largest industrial groups is having a bad time


After a two-year investigation, Hindenburg Research, an investment research company, made allegations of fraud and manipulation of share prices. This has shaken the Adani group, which Gautam Adani heads.

The US company published a report on January 24, over 100 pages long. It included charges that date back decades and revealed that the group would have valued seven of its companies, leading to them growing by 819%. These same companies could have also pledged inflated shares in return for loans. The Indian holding lost several billions of dollars within days. The research content was denounced and labeled as maliciously damaging.

Gautam Adani: Who are you?

Born to small textile traders from Gujarat, India’s westernmost state, in 1962, Gautam Adani was Asia’s third richest person in 2012. According to Bloomberg reports, Adani quit university and began working as a diamond selector for a Mumbai-based company before becoming an importer of materials necessary for producing artifacts. He managed the port at Mundra in the 1990s, which is now his.

His group includes companies in coal mining and trading, gas distribution, and coal-fired power production. The holding company, India’s largest port operator, also manages many of the country’s most important airports. Adani Group, which owns Wilmar International Ltd in Singapore, also operates a real estate company, Adani Capital, a bank company, and a food-and-oil company.

Gautam Adani, an Indian businessman, is considered the closest to Prime Minister Narendra Modi. He was born in Gujarat as a Gujarati tycoon. Modi’s efforts to expand his businesses have been mirrored by Adani’s. They aim to increase the economy’s value to 3.2 trillion dollars. Adani increased its coal-fired power generation after Modi promised Indians that he would provide reliable electricity to more people.

Bloomberg reports that the synergy between Adani and the billionaire would also produce results overseas: Adani began building a port facility in Sri Lanka in 2021. Indian and Sinhalese officials would claim that Adani’s investment was made with the encouragement of the Modi government. This is to curb Chinese influence in the region. Adani’s potential resources and expertise would allow the holding company to meet any country’s political priorities.

What is Hindenburg Research?

Hindenburg Research was founded by Nate Anderson less than five years back. It is a US short-seller who places bets on companies downward after uncovering their poor or inept attitudes. This has been done with companies such as Lordstown Motors and Nikola. “It specializes,” reads its website and does forensic financial research to determine how best to invest its economic resources.

The website continues, “The research that has the greatest impact is the one that uncovers information from unusual sources that are hard to find.” Hindenburg Research focuses on accounting irregularities and those in critical roles involved in improper behavior.

The legal implications

Indian holding strongly rejected the report by the New York fund. Jatin Jalundhwala is the Adani group’s head of the legal department. He stated that the company would move to India and the United States as soon as possible to receive compensation for the damages.

“The report and its baseless contents – declared the lawyer in a note posted on the holding site – were intended to have a deleterious impact on the share values of the group companies since Hindenburg Research, according to its admission,” it is a move that seeks to profit from a fall in Adani’s shares.

“We are deeply disturbed at this deliberate and reckless attempt of a foreign entity to mislead the investment community and the general public, undermine the goodwill, reputation, and leadership of Adani group, and sabotage securities for the public subscription by Adani enterprise.”