Hours after the Adani Group described a Hindenburg Research report accusing it of stock manipulation as a “calculated attack” on India, the American firm responded on Monday saying that the conglomerate cannot obfuscate its fraud by nationalism.

“We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation,” Hindenburg Research said in a statement.

On Sunday, the conglomerate issued a 413-page response four days after the company published its report, leading to a steep fall in share prices of Adani Group companies. Over two trading sessions on Wednesday and Friday, 10 listed companies of the group, led by Indian billionaire Gautam Adani, lost Rs 4.17 lakh crore in market capitalisation.

Adani, who was the world’s third richest person at the start of last week, was ranked number seven on the Forbes’ billionaires tracker after Friday’s trade. An hour into trading on Monday, the group’s flagship firm Adani Enterprises was up 6.5% on the Bombay Stock Exchange, but several other stocks were losing up to 20%.

In its response on Sunday, the Adani Group alleged that the mala fide intention of Hindenburg was apparent as the report was released ahead of a $2.5 billion share sale by its flagship firm Adani Enterprises.

“It is tremendously concerning that the statements of an entity sitting thousands of miles away, with no credibility or ethics has caused serious and unprecedented adverse impact on our investors,” the Adani Group said.

It added that Hinderburg Research, by its own admission, is a short seller and claimed that its aim was to book massive financial gain through wrongful means.

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”, or making information about companies public in order to trigger a fall in their share prices.

The Adani Group also stated that the New York-based firm “has not published this report for any altruistic reasons but purely out of selfish motives and in flagrant breach of applicable securities and foreign exchange laws”. It asserted that the report was neither objective nor well-researched.

Hindenburg Research had said in its report that markets regulator Securities and Exchange Board of India had investigated and prosecuted over 70 entities for manipulating Adani stocks between 1999 and 2005. The Adani Group, however, said that there are no ongoing proceedings before SEBI in connection with the matter, and all past cases have been closed.

“We are neither aware of, nor are we required to be, aware of any proceedings against these other ‘entities and individuals’, who are not Adani promoters,” the corporate group said.

Hindenburg response

In its response on Monday, Hindenburg Research said the Adani Group had not given specific answers to 62 of the 88 questions the research firm had posed in its report last week.

“...It mainly grouped questions together in categories and provided generalised deflections,” Hindeburg said. “In other instances, Adani simply pointed to its own filings and declared the questions or relevant matters settled, again failing to substantively address the issues raised.”

The American company pointed out that Adani’s 413-page response consisted of “330 pages of court records, along with 53 pages of high-level financials, general information, and details on irrelevant corporate initiatives, such as how it encourages female entrepreneurship and the production of safe vegetables”.

Hindenburg claimed that Adani’s response had “largely confirmed” its findings and ignored key questions it had raised about stock manipulation and improper use of offshore tax havens.

Hindenburg’s allegations

In its January 24 report, Hindenburg claimed that the Adani companies are on a “precarious financial footing”. It alleged that the conglomerate has amassed substantial debt by pledging overvalued shares.

The report noted that Gautam Adani’s net worth has risen by more than $100 billion (Rs 8.1 lakh crore) over the last three years, largely due to share prices of seven of his listed companies rising by an average of 819% during this period.

However, Hindenburg’s research said that the high valuation of the stocks do not augur well for their healthy financials as seven companies of the conglomerate have an 85% downside risk – a worst-case estimation of the potential loss in the share prices.

On Wednesday, the Adani Group said that the report was “a malicious combination of selective misinformation and stale, baseless and discredited allegations”. It said that it is considering “remedial and punitive” legal action against the United States-based company in connection with its allegations.

Hindenburg responded by saying that Adani had ducked the issues the firm had raised and instead resorted to “bluster and threats”.

Also read: From 2014 to 2019: How the Adani Group funded its expansion