US investigators train lens on Adani

Trouble for Adani continues to loom. All the Adani shares were under pressure on Friday after a Bloomberg report said that US authorities, including the Securities and Exchange Commission and the Attorney’s Office in Brooklyn, New York, are enquiring about the representations made by Adani Group to its American investors in the wake of the Hindenburg Research’s report that accused the company of using offshore companies to manipulate its share prices.

Most of the shares were trading almost 2-7 down. Institutional investors with large holdings in the Indian conglomerate have received inquiries from the Attorney’s Office in Brooklyn and SEC asking for information on what Adani group told those investors, the report added.

In January this year US short seller Hindenburg came up with the report on Adani where it imposed various allegations on the group ranging from the cooking of books to misappropriate use of offshore accounts. It accused Adani group of “a brazen stock manipulation and accounting fraud scheme”. After the report, shares of all the group’s companies took a serious beating. Indian agencies like SEBI, Supreme Court also started investigating the company. Adani group at that time was looking to bring its FPO but in the light of Hindenburg report it cancel the FPO.

Gradually Adani Group company made efforts to improve its reputation. As a result, its share also revived. Now another storm has hit the shores. On the domestic front investigations against Adani haven’t found anything malicious against the group but it is still going on.

The company is fundamentally strong. On the business model front, there are no issues but there are concerns about corporate governance. The rise of Adani has been stratospheric and that has brought it on the global radar.