The Adani Group on Thursday said that it is considering “remedial and punitive” legal action against United States-based company Hindenburg Research, a day after the firm alleged that the Indian conglomerate made improper use of offshore tax havens.

On Wednesday, shares of Adani Group companies fell sharply after Hindenburg Research said in a report that the listed companies of the conglomerate were on a “precarious financial footing”. It alleged that the group headed by India’s richest person, Gautam Adani, has amassed substantial debt by pledging overvalued shares.

Responding to the allegations, the Adani Group had said on Wednesday that the report was “a malicious combination of selective misinformation and stale, baseless and discredited allegations”.

On Thursday, the Adani Group issued another media statement, saying that the report was “maliciously mischievous” and “unresearched” and that it had adversely affected the conglomerate, its shareholders and investors.

“We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the FPO [Follow-on Public Offering] from Adani Enterprises,” the Adani Group said.

Hindenburg Research, however, has defended the report, saying that it stands by it.

The conglomerate said that Hinderburg Research, by its own admission, is positioned to benefit from a slide in shares of Adani Group companies.

In its report, Hindenburg Research had said that it holds short positions in the Adani Group companies through US traded bonds and non-Indian-traded derivative instruments. Short positions are “created when a trader sells a security first with the intention of repurchasing it or covering it later at a lower price”, according to Investopedia.

Investment research firms like Hindenburg often engage in “activist short selling”, making information about companies public in order to trigger a fall in their share prices.

This was not the first time that an investment research firm expressed concern about the Gautam Adani-led group’s financials.

In August, CreditSights, a debt-research unit of credit rating agency Fitch Group, had also said that is that the Adani Group is “deeply overleveraged”. It had said that in the worst-case scenario, the ports-to-power conglomerate could fall into a debt trap and default.

Legal action would be meritless: Hindenburg Research

Hindenburg Research on Thursday said it believes any legal action against it by the Adani Group would be meritless.

It said that Adani Group has resorted to bluster and threats instead of answering the issues raised.

“In the 36 hours since we released our report, Adani hasn’t addressed a single substantive issue we raised,” the company said. “At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions.”

The company said that the report the Adani Group was referring to as “unresearched”, was “106-page, 32,000-word report, with over 720 citations and prepared over the course of 2 years”.

“If Adani is serious, it should also file suit in the US where we operate,” it added. “We have a long list o documents we would demand in a legal discovery process.”