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Hindenburg group accuses Adani group of fraud


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4 hours ago, Under_Score said:

New report from Hindenburg Research coming soon.


What you expect after all the money they made in short selling. Most houses give buy Hold Sell rating. These lads give Sell rating and publish a report. I am sure it will be again for some org of a developing nation.


Effectively they are making money on slave mentality of people.


BTW: Everyone who thinks this business has no money, that business has no money, Can they check how much mortgage they have. If today Bank asks me to pay back all mortgage in couple of months, I will have to short sell my properties. Why same logic cant be applied by same people for big buisinesses

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On 3/8/2023 at 9:29 PM, gattaca said:

Rajiv Jain US asset manager has invested 15,000 crore and planned on buying more. He mentioned he doesn’t follow the herd. Interesting to see what Hindenburg does now ? Will they continue to short ? That’s quite a lot of money. 

I'm not sure much can be read into this. Rajiv Jain was an advisor to the NDA wasn't he? Hardly impartial. 

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1 hour ago, Nikhil_cric said:

I'm not sure much can be read into this. Rajiv Jain was an advisor to the NDA wasn't he? Hardly impartial. 

No Idea he was. But anyways this is good for adani long term. We all knew his companies was using debts to create new companies with global financial crisis which might worse. In next few months. The no of people effected will be huge if they don’t do well. They are in the too big to fail category with the no of companies they have unfortunately.

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On 2/4/2023 at 6:53 PM, Khota said:

China took a huge beating because no one had faith in some of their stock valuations.


India when it comes to stock market has more experience and history compared to China. Indian market is considered more mature. Then this cheat comes along.

Chinese communist party themselves hurt their market to bring likes of Baba and tencent under control. They were in top 10 publicly listed companies before that episode by communist party.


Both Bharat and China stuck in VWO but China influence is 4X of Bharat in that emerging market index.

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The Adani Group repaid its loans against promoters’ shares. But the disclosures don’t add up

The Adani Group claimed “complete” repayment of $2.15 billion in shares-backed debt. But it's not so straightforward


Under Indian laws, banks and listed firms are obligated to disclose to stock exchanges the release of shares upon repayment of debt

Neither banks nor listed Adani companies have made disclosures to stock exchanges regarding the release of Adani companies’ pledged shares

The group’s loan repayments came amid lenders’ margin calls, which may have forced the group to repay part of the loan instead of pledging more shares

The Adani Group's recent claims regarding the release of shares appear to be in conflict with the numbers disclosed in their stock-market filings


Read a 200 word free summary.


Update, 3:30pm, 29 March

Following the publication of The Ken’s story on 28 March, the Adani Group released a media statement late in the evening on the same day. This statement was shared with the stock exchanges and The Ken on the morning of 29 March. 

Though The Adani Group did not respond to The Ken on specific questions that had been sent to them 24 hours prior to publication of the story, we are addressing the points made in their press release in good faith.  

The conglomerate maintained in the media statement that “it has completed full prepayment of margin linked share backed financing aggregating to USD 2.15 billion” and that “all corresponding shares pledged for those facilities have been released.” 

Responding to the claim in the story that lenders have not released a “large portion of (Adani Group) promoters’ shares”, the media statement said: “As per the present rules, any share pledge or release is automatically reported by system driven disclosure (SDD) mechanism of the depository participant, and no separate filing is required to be made.” 

While the BSE website does currently reflect the updated SDD details pertaining to Adani Enterprises, Adani Green Energy, Adani Transmission and Adani Ports, the time stamp for “exchange broadcast date and time” for these latest disclosures is post  5.30 pm on 28 March. The Ken’s story was published 9.5 hours earlier, at 8 am on the same day. 

In response to the data published in the story on the promoters’ pledged stake in Adani Green Energy Ltd (6.9%),  Adani Enterprises Ltd (2.7%), Adani Transmission Ltd (8.1%), and Adani Ports Ltd (10.8%) as on 27 March, the statement provided revised numbers for the same. 

The Ken had calculated the pledged stake as on 27 March based on the available SAST disclosures on the BSE website. Our story was subsequently published at 8 a.m on 28 March. As we have mentioned earlier, the SDD page was updated with additional disclosures about pledged Adani group shares 9.5 hours after the story was published. Nonetheless, we have now revised the chart in the story with the latest figures to reflect newer information.

Finally, our story said that the two tranches of loan repayments, in February and March, amounted to roughly ~$2 billion, while a press release later in March put the figure at $2.15 billion. In response to this, the Adani Group’s media statement said that after the first two tranches, there was an “incremental prepayment” of $134 million. Once again, we’ve updated the story in light of this new information. 

We’ve also amended the headline and strap of the story to accurately reflect information that has come to light post-publication. 

To say that 2023 did not start well for the energy-to-ports conglomerate Adani Group would be an understatement.

The group is still feeling the aftershocks of a damning report released in January by the US-based short seller Hindenburg Research. It recently had to put on hold plans for a greenfield petrochemical plant and a coal power plant takeover worth over Rs 42,000 crore (~$5 billion). The group also put on the back burner its plans to buy a stake in the government-owned power company PTC India Ltd, formerly Power Trading Corporation. These have all been insults to injury since its much-touted multi-billion dollar follow-on public offer (FPO) was junked earlier this year.

The stock prices of the group’s companies have taken a nosedive since the Hindenburg report, after a confounding rally that lasted for about two years. The free fall in the stock prices has slowed down for now following the group’s highly publicised announcements of a “complete” repayment of margin-linked share-backed loans by the promoters. However, these announcements conceal more than they reveal.

Share-backed loans are considered a risky way of raising money as they involve pledging shares of a company as collateral to obtain a loan. A decline in the value of these shares may result in the lender asking for more shares in collateral or selling these shares, triggering financial instability. The Adani Group promoters, whose shares can be pledged for such loans, include the group’s chairman Gautam Adani, his wife Priti, brother Rajesh, private promoter entities and family trusts. Money raised through share-backed loans can be used for both business and personal use.

Over the last two months, the group has claimed to have repaid about $2.15 billion; it announced, on 12 March, that all of its margin-linked share-backed debt has been paid. However, regulatory filings examined by The Ken show that banks have not yet released a large portion of its promoters’ shares, as they should have if the loans had indeed been completely repaid. As per Indian laws, disclosures on the release of shares need to be filed with stock exchanges by lenders within two working days, and by promoters within seven working days. But neither the Adani Group nor the lenders have made these disclosures to stock exchanges.

The context in which these loan repayments occurred helps explain the saga. As the Financial Times reported in February, the Adani Group was facing margin calls from lenders to the tune of millions of dollars. This was because the value of the shares, which banks held as collateral, plummeted in the wake of the Hindenburg report.

To break this down, say a promoter borrowed Rs 100 ($1.2) and pledged shares worth Rs 140 ($1.7) as collateral. If the value of the shares drops to Rs 100, the bank will issue a margin call. The promoter then has two options: either pledge additional shares to meet the Rs 140 collateral requirement or repay a portion of the loan to reduce the collateral requirement to Rs 100. It appears that the Adani Group opted for the latter—repaying part of the loan instead of pledging more shares.

This has been misrepresented in publicity material and Indian media to indicate that the entire margin-linked share-backed debt had been repaid. But, in fact, the group has only reduced the loan amount through partial repayment to avoid pledging more shares and any action against it by the lenders.

The Adani Group did not respond to detailed queries sent by The Ken. Their response will be published as and when received.

The government also seems to be getting involved in how public-sector banks have been handling shares as collateral. Business Standard reported that in a meeting chaired by the finance minister Nirmala Sitharaman on 25 March, the government told publicly owned banks to actively monitor and manage the shares companies have pledged as collateral for loans, and to integrate market data to do so.

A case of missing disclosures

In May 2020, Gautam Adani’s son Jeet Adani, in an earnings call of Adani Ports & SEZ, said the group would eliminate promoters’ pledges in less than two years. “Our aim at the promoter level is to take this number to zero,” he said. “We view this as a type of financing strategy that we do not want to continue going over in the future. You can expect in the next 12 to 18 months for this entire promoter pledge saga to get over.”

And yet, the group is not far off from where it was three years ago.

On 6 February, the Adani Group put out a statement that its promoters had “prepaid $1.1 billion worth of loans” ahead of their maturity in September 2024. These loans were availed by pledging promoters’ shares in three of its listed group companies—Adani Ports & SEZ, Adani Green Energy, and Adani Transmission. The lenders included various international banks, including Barclays, Citigroup, Deutsche Bank, Sumitomo Mitsui Banking Corporation, and JPMorgan Chase.

In the statement, the group claimed that the pledged shares of these companies would be released by lending banks in “due course” upon repayment of the debt. And that the repayment would lead to the release of 168.27 million shares of Adani Ports & SEZ, representing 12% of the promoters’ holding; 27.56 million shares of Adani Green, representing 3% of the promoters’ holding; 11.77 million shares of Adani Transmission, representing 1.4% of the promoters’ holding.

The release of these shares would have had to be disclosed to stock exchanges, as mandated by Regulations 29 and 31 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

However, an examination of the Substantial Acquisition of Shares and Takeovers (SAST) disclosures of each of these companies by The Ken shows that, after Adani’s prepayment announcement, banks have only released the pledged shares of Adani Ports & SEZ.

The pledged shares of Adani Green and Adani Transmission have not been released by banks even a month after the loan repayment. This is highly unusual as pledged shares are usually released immediately after the borrower settles their debts.

Like most of its listed entities, Adani Green is tightly controlled by the promoters, with 60% of the shares held by them. The shareholding pattern of the Adani companies has been under question for a long time—the Hindenburg report highlighted this, and The Ken wrote about it in April 2021. Hindenburg attributed the rally in Adani companies’ stock prices to a substantially lower free float and stock-price manipulation.

Adani Transmission, too, follows a similar pattern of substantial promoter control, although a considerably smaller portion of the promoters’ holdings is pledged to avail loans. As of 31 December 2022, the promoters had pledged 4.36% in Adani Green and 6.62% stake in Adani Transmission, according to official filings.

The report in Financial Times on 8 February suggests that before the group made the announcement of prepaying $1.1 billion of these debts, the group faced margin calls of $500 million from these foreign banks.

The deeper you go, the darker it gets

As the Adani Group struggled to regain its footing in the wake of the Hindenburg saga, it was extended a lifeline by GQG Partners, an asset-management firm focused on active equity portfolios, headed by Rajiv Jain.

On 2 March, GQG Partners announced that it was investing $1.9 billion in various Adani-owned enterprises. A week later, Jain announced that he wasn’t averse to investing more in Adani. In February, before he pumped money into the conglomerate, Jain had said despite Adani’s burgeoning debt, it wasn’t “a Satyam or an Enron”, referring to large corporations that collapsed after their involvement in large-scale corporate fraud was exposed. For its investments, GQG Partners got varying stakes in four Adani Group companies, including Adani Enterprises, the conglomerate’s mothership.

On 7 March, a few days after GQG’s investment, the group again announced that it was settling promoter debt worth $902 million. Like its announcement in February, this settlement was a “prepayment” before the maturity of these loans in April 2025. The group claimed that portions of promoters’ stake in Adani Ports & SEZ, Adani Green, Adani Transmission, and Adani Enterprises pledged for this loan would also be released. None of the pledged shares, pertaining to this payment, have been released by banks, as per regulatory filings.

Explore more infographics like this in The Ken - Visual Stories

On 12 March, the group went further and declared with the headline that “Adani Fully Prepays Share Backed Promoter Financing”. The press statement said the group had “completed full prepayment of margin-linked share backed financing aggregating to $2.15 billion, well before the committed timeline of March 31, 2023”. Interestingly, the two tranches of loan repayment the group has announced—$1.1 billion in February and $905 million in March—add up to ~$2 billion.

In a media statement released after the publication of the story, the Adani Group said that there was an “incremental prepayment” of $134 million after the February and March payments. This would bring the total to $2.15 billion.

An examination of SAST records by The Ken revealed two crucial facts. First, despite the group’s claims of “complete” repayment on 12 March, none of the group promoters’ pledged shares in any of the above-mentioned entities (except Adani Ports & SEZ in February as part of the $1.1 billion repayment) have been released by lenders.

These claims become harder to believe considering the fact that the group has been forced to pledge more promoter shares after the State Bank of India (SBI) made a series of margin calls. SAST disclosures show numerous transactions between 8 February and 6 March, in which more promoter stakes were pledged after SBI’s margin calls.

On 6 March, the number of promoter shares in Adani Green pledged with SBI almost doubled. On the same day, the promoters’ shares in Adani Transmission pledged with SBI also more than doubled. The group’s promoters had pledged these shares towards existing loans for Adani Enterprises.

On 13 February, the chairman of SBI Dinesh Khara told a private news channel that the additional pledges by the Adani Group were not for a new loan but were a “top up of collateral to maintain covenants relating to the existing loan to the Gautam Adani-led group.”

A senior banker with two decades of experience in investment banking, who did not want to comment publicly on the matter, offered an explanation. They still need the existing pledges after the repayment of loans because of the plummeting value of pledged shares, which would be insufficient to recoup the loans in case of a default.

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Another senior SBI official, in an interaction with a private news channel, also mentioned that the group had to maintain a “140% collateral”. This meant that for every $1 billion loan, Adani had to pledge shares, or any other collateral, worth $1.4 billion.

While there may be “procedural delays” in filing such disclosures with the bourses, the case of the Adani Group was intriguing for a couple of reasons, said a senior advocate, who did not want to comment publicly on the matter. First, procedural delays are usually for a few days, but in Adani’s case, no disclosures have been made on the release of promoters’ shares for a relatively long time—more than a month in case of the February payment and over three weeks since the March payment.

The senior counsel also expressed concern that the Adani Group had actually increased its pledged shares with SBI, despite claiming it had repaid all of its margin-linked share-backed loans. Such lack of transparency is in contravention of stock-market regulations that require ordinary investors to be informed about critical developments in companies they have invested in.

The group’s claims of significant debt repayment have had little effect on international credit rating agencies’ outlook on the Adani firms since the Hindenburg report.

On 22 March, S&P Global Ratings released a credit report, which hinted at a potential downgrade for the Adani Group. “We are likely to take a negative rating action should any investigation uncover serious wrongdoing,” said the report. “This may include previously undisclosed material related-party loans, cash leakage, or misreporting.”

Earlier, on 10 February, Moody’s had changed the outlook of Adani Green and Adani Transmission—the two companies in which banks haven’t released the promoters’ pledged shares—to negative from stable.

Of misrepresentations and non-disclosures

Adani’s failure to disclose that promoters’ pledged shares remained unreleased even after the repayment of $2.15 billion in loans may seem like an anomaly. However, upon further investigation, The Ken found other discrepancies between Adani’s public statements and the actual events that occurred on stock exchanges.

In the 7 March statement, the group said banks would release 31 million shares of Adani Enterprises as part of its loan prepayment. This was a staggering 9 million shares or 40% more than what it had declared to stock exchanges, based on an examination of SAST records as on 7 March. No interim share-pledge disclosures have been made by Adani Enterprises till the time of publication of this report. This raises the question whether the group has pledged more shares than it has disclosed to the stock exchanges? If so, this would be a serious violation of the regulations.

The 7 March statement also said the $905 million loan repayment would lead to the release of 155 million shares of Adani Ports. However, an examination of SAST records on 7 March revealed that the number of shares pledged with banks was only 153 million.

Explore more infographics like this in The Ken - Visual Stories

This, too, begs the question: why is the group claiming the release of a higher number of pledged shares than it has disclosed in its stock-market filings?

The senior banker explained why pledges might have not been disclosed to the full extent. “Promoters were facing margin calls as shares of their companies whose stake was pledged with banks had fallen significantly after the publication of the Hindenburg Report,” said the senior banker, adding that this might have led the promoters to pledge more shares that were not disclosed to the stock exchanges. “These undisclosed pledges in two group companies amount to a misrepresentation of how Adani showcased its promoter pledge and loans to the stakeholders. This could be serious non-compliance of SEBI regulations.”


sauce: https://the-ken.com/story/the-adani-group-repaid-its-loans-against-promoters-shares-but-the-disclosures-dont-add-up/

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15 hours ago, Khota said:

This topic is at page 20 because of few misguided bots who value party more than the country.

Issue is, Some people think Capitalists are good for economy and hence rest of society in large, Some think they can have a controlled system with equidistribution of wealth. Atleast former camp is honest enough to respect opinion of later camp. But ur comments doesnt reflect same courtesy from later camp

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2 hours ago, mishra said:

Issue is, Some people think Capitalists are good for economy and hence rest of society in large, Some think they can have a controlled system with equidistribution of wealth. Atleast former camp is honest enough to respect opinion of later camp. But ur comments doesnt reflect same courtesy from later camp

Let me summarize for you


"ssue is, Some people think Capitalists are good for economy and hence rest of society in large, Some think they can have a controlled system with equidistribution of wealth. Atleast former camp is honest enough to respect opinion of later camp. But ur comments doesnt reflect same courtesy from later camp" = Crap.


If it is all level playing field capitalism works. If you help your friend you create oligarchs like Russia.

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2 hours ago, Khota said:

Let me summarize for you


"ssue is, Some people think Capitalists are good for economy and hence rest of society in large, Some think they can have a controlled system with equidistribution of wealth. Atleast former camp is honest enough to respect opinion of later camp. But ur comments doesnt reflect same courtesy from later camp" = Crap.


If it is all level playing field capitalism works. If you help your friend you create oligarchs like Russia.

Nope, its huge mistake to assume Capitalists  of USA or West do not wield power similar or more then Oligarchs of Russia.



Edited by mishra
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