According to two people familiar with the subject, Adani Group has hired Grant Thornton to conduct independent audits of several of its subsidiaries in an effort to disprove charges made by short-seller Hindenburg Research that have hammered its stocks and bonds.
The hiring is Adani Group’s first significant move to defend itself following Hindenburg’s January 24 report accusing it of unlawful use of offshore tax havens and stock manipulation.
The firm, run by billionaire Gautam Adani, has categorically refuted the charges, but investors are worried. In the previous three weeks, the market capitalization of the group’s seven listed businesses had dropped by nearly $120 billion.
Following the Hindenburg investigation, Adani Group announced last week that it was exploring an independent examination of legal compliance, related party transactions, and internal controls. For the first time, Grant Thornton’s appointment is reported here.
According to sources who declined to be identified since the appointment is private, Grant Thornton has been contracted to perform independent audits of various Adani Group entities.
According to one of the individuals, Grant Thornton would investigate whether related-party transactions at the Adani Group met corporate governance norms.
Grant Thornton and Adani Group did not reply promptly to requests for comment.
On Monday, Adani Group tried to reassure investors by stating that it had excellent cashflows, that its business plans were fully funded, and that it was “confident in our portfolio’s sustained potential to generate superior returns to shareholders.”
However, regulatory pressure is mounting. On Monday, India’s market regulator said that it was looking into the Hindenburg report, as well as market action before and after it was released.
According to the US short-research, the seller’s several “undisclosed related party transactions” involving both listed and private Adani entities were discovered, allegedly in breach of Indian disclosure regulations.
In its rebuttal, Adani said “all related party transactions are at arm’s length, properly disclosed, and reviewed or audited by statutory independent auditors.”
