According to two people familiar with the case, Adani Group has hired Grant Thornton to conduct independent audits of several of its subsidiaries in an effort to disprove assertions by short-seller Hindenburg Research that have harmed its stocks and bonds.
The hiring is Adani Group’s first big attempt 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 fiercely refuted the charges, but investors are anxious. In the previous three weeks, the market capitalization of the group’s seven listed businesses had dropped by around $120 billion.
Following the Hindenburg investigation, Adani Group announced last week that it was considering an independent examination of problems relating to legal compliance, related party transactions, and internal controls. The hiring of Grant Thornton is being reported here for the first time.
Grant Thornton has been contracted to perform independent audits of various Adani Group entities, according to individuals who declined to be identified since the appointment is secret.
According to one of the individuals, Grant Thornton will investigate whether related-party transactions at the Adani Group meet corporate governance norms.
Grant Thornton and Adani Group did not immediately reply to requests for comment.
On Monday, Adani Group attempted to reassure investors by stating that it had solid cashflows, that its business plans were fully funded, and that it was “confident in the sustained capacity of our portfolio to generate superior returns to shareholders.”
However, regulatory pressure has been mounting. On Monday, India’s market regulator announced that it was looking into the Hindenburg report, as well as market action before and after the report was published.
According to the US short-seller report, several “undisclosed related party transactions” by both listed and private Adani entities were discovered, allegedly in breach of Indian disclosure requirements.
In its rebuttal, Adani said “all related party transactions are at arm’s length, properly disclosed, and reviewed or audited by statutory independent auditors.”