The Adani group has said the alleged accounting or fraud type assertions or “investigation” by US-based Hinderburg Research is "devoid of facts" as of the group’s nine public listed entities, eight are audited by one of the big-six auditing companies.
The company said it acts as an incubator and has businesses in various sectors and subsidiaries and associates spread over eight jurisdictions. "There are more than 27 statutory audit firms
which audit various entities within Adani Enterprises. These include a mix of big-four statutory auditors as well as statutory auditors who are highly reputed in their respective jurisdictions."
For example in Adani Airports subsidiary, MIAL (Mumbai International Airport) is audited by Grant Thornton, while the other six airports are audited as per Airport Authority of India panel provisions in concession agreement by audit firm, Gayendra & Co," AEL said in a statement to the stock exchanges.
The group said it is evaluating one of the global six audit companies for Adani Total Gas too.
Adani Enterprises said 21 questions on related party transactions by Hindenburg and reference to court cases are nothing but the group companies' own public disclosures from as far back as 2015.
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The Adani group was reacting to the various allegations made by US-based short seller Hindenburg Research, which resulted in its share prices falling in the last two trading days on the eve of its Rs 20,000 crore follow on public offer (FPO). The FPO opened today and closes on January 31.
On the allegations of leverage or over-leverage of group companies, AEL said 100 of its various companies are rated by top rating firms, including Moody's, and these account for nearly 100 per cent of its EBITDA (earnings before interest, tax, depreciation and amortisation.
On the allegations of revenue or balance sheet being artificially inflated or managed, the company said out of nine listed companies in the Adani group, six are subjected to specific sector regulatory review for revenue, costs and capital expenditure.
In addition to accounts, Sebi, BSE or NSE requirements six of the group's listed entities are also obliged to provide regular filings for the business regulators.
In these cases revenue, claimed expenses and claimed capital expenses are independently reviewed by the regulators as part of the relevant legislations eg Electricity Act, it said.
On the corporate governance issue, the company said four of its large companies are in top 7 per cent of the peer group in emerging markets or the sector or the world.
On the leverage against shares (LAS) issue, the company said the overall promoter leverage is less than 4 per cent of the promoter holding.
On Thursday, the Adani group had threatened to take legal action against Hindenburg Research, saying the "maliciously mischievous, unresearched" report had adversely affected the Group, its shareholders and investors.
"The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens. Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies, as Hindenburg Research, by its own admission, is positioned to benefit from a slide in Adani shares," Jatin Jalundhwala, Adani Group Head, Legal, had said.