NEW DELHI: In an effort to clear its name of the scathing accusations made by the American short-seller Hindenburg Research and to reassure investors and regulators, the embattled Adani group has hired accounting firm Grant Thornton to conduct an independent audit of certain of its companies.
The audit's main goal is to demonstrate to authorities like the Reserve Bank of India (RBI) that the group is fully compliant with all applicable laws and has nothing to conceal, souce said.
The audit will specifically investigate any instances of theft or repatriation of cash as well as any instances of loans being used for purposes other than those for which they were granted.
The audit, they claimed, would go a long way towards demonstrating that the books are in order and that project executions are moving forward, two things that investors are closely monitoring given the harm that the Hindenburg report has done to market value.
Adani Group had on Monday tried to soothe the market as the run on its shares persisted by stating that its growth plans are intact, business plans are fully funded, and it is confident in providing returns to shareholders.
Since the January 24 report by the American short-seller Hindenburg Research claimed that Adani pulled off "the greatest fraud in corporate history" utilising offshore tax havens and stock manipulation, the market value of the group's seven listed firms has decreased by half.
All accusations have been refuted by the organisation, which has called them "malicious," "baseless," and a "planned attack on India." The late investor and con artist Bernie Madoff was referenced when it called Hindenburg the "Madoffs of Manhattan."
The group spokeswoman had stated that the balance sheets of each of the separate portfolio firms were "extremely healthy." "Our business plan is fully funded, we have industry-leading development skills, solid corporate governance, secure assets, and robust cash flows."
Reports of a reduction in growth goals and capex were refuted by the group. Despite possible delays, no projects have been abandoned or postponed, and plans to expand solar power, green hydrogen, and airports are still on schedule. "Once the current market stabilizes, each conglomorate will review its own capital market strategy, be rest assured, we are confident in the continued ability of our portfolio to deliver superior returns to shareholders," the spokesperson added. The Adani controversay has sparked concern of financial contagion in India and ability to carry on infrastructure projects.
The $50 billion green hydrogen production ambitions of the Adani Group were announced last week, but the French oil giant TotalEnergies indicated it would hold off on investing until the conclusion of an independent audit.
Bernstein Research estimates that Adani Green can pay off all of its debt of $22,000 crore that is due in the fiscal year ending in March 2025 if it sells some renewable energy assets, asks current investors for additional equity funding, cancels some planned projects, and refrains from bidding for new ones.
The spokesperson, however, termed questions over the Adani group's ability to fund projects and refinance debt as 'unfounded speculation'.
Last week, index provider MSCI announced it will reduce the weight of several of its stocks in its indices while Moody's Investors Service lowered the ratings outlook for four Adani group firms from stable to negative. Nirmala Sitharaman, the minister of finance, stated on Saturday that the country's regulators are very knowledgeable and focused on the Adani Group situation.
"India's regulators are highly experienced and they are experts in their domain. The regulators are seized of this matter and they are on their toes as always, not just now," she had said.
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