Adani Group touts cash pile to soothe Hindenburg-fuelled concerns

In a strategic move, the Adani Group has revealed that it has sufficient cash that would easily pay off over 30 months of its debt against key liquidity concerns. It comes amid fresh fundraising by its flagship unit, Adani Enterprises Ltd., at this time when this Indian conglomerate is under scrutiny following allegations made by Hindenburg Research.

Consolidated financial highlights

According to the latest earnings release, cash at Adani has now formed 24.8 per cent of its gross debt, up from 17.7 per cent a year ago. This followed strong financial performance during which earnings before interest, tax, depreciation, and amortization rose 33 per cent to Rs 225.70 billion ($2.7 billion) for the quarter ended June 30.

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The group is targeting Rs 100 billion to Rs 120 billion through share sale after its transmission arm completed a $1 billion fund raise. This potential financing is key to restoring investor confidence in the group, which Hindenburg Research charged with wide-scale fraud and corporate malfeasance early in 2023—events that at one point led to the loss of more than $150 billion in market value. Adani has denied the allegations.

Through a BSE filing titled "Hindenburg Report - A Red Herring" dated August 11, 2024, the Adani Group categorically denied the allegations of the Hindenburg Group, terming them as mischievous and malicious.

"The latest allegations by Hindenburg are malicious, mischievous and manipulative selections of publicly available information to arrive at pre-determined conclusions for personal profiteering with wanton disregard for facts and the law. We completely reject these allegations against the Adani Group which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Hon'ble Supreme Court in March 2023."

"It is reiterated that our overseas holding structure is fully transparent, with all relevant details disclosed regularly in numerous public documents. Furthermore, Anil Ahuja was a nominee director of 3i investment fund in Adani Power (2007- 2008) and, later, a director of Adani Enterprises until 2017."

"The Adani Group has absolutely no commercial relationship with the individuals or matters mentioned in this calculated deliberate effort to malign our standing. We remain steadfastly committed to transparency and compliance with all legal and regulatory requirements. For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg's allegations are no more than red herrings thrown by a desperate entity with total contempt for Indian laws."

Debt on the Adani group

It is to be noted that the gross debt of the Adani Group had touched Rs 2.41 trillion by the end of the quarter, drawing many raised eyebrows on its ability to service such monstrous financial liabilities. Further, with the ever-evolving situation it is to be seen how the Adani Group will defend itself from any upcoming counter by Hindenburg.