Adani Enterprises (NSE: ADANIENT) is down 5.8% today, leading the pack of all ten Adani listed enterprises down. The problem is a continuation of the claims that Hindenburg made in its shortselling report on the entire Adani Group. Hindenburg didn't pull any punches, describing the entire corporate structure something of a sham. We don't need to go that far, we can just observe that interesting questions about debts, corporate cross shareholdings and so on were asked. Adani insists that it has answered all such questions and there is nothing to see here.
Today's repeat comes from a site called The Ken (Indian English can borrow delightfully from varied archaic forms of English. Here “ken” is the Scottish word for “knowledge” or “know”, as in “D'ye ken?”, or “Do you know?”). A promoter in this sense is an insider, or in more detail the Adani family itself. The claim is that after the Hindenburg report about such debts and cross shareholdings the Adani family unwound any such arrangements. The Ken is doubting whether this is true.
Adani Enterprises share price from Google
In more detail, the Hindenburg claim was that the varied group share prices were bolstered by cross shareholdings. Those were financed by large debts backed by the shares themselves. What this would imply is that if any one group company started to falter then the loans would be called in as the security disappeared and this would trigger a series of losses across the whole group. A series of falling dominos.
The Adani Group has said this wasn't so and even if it was it has now paid off all of the loans and so it's not a worry any more. In a nice piece of investigative work The Ken has gone looking for the bank reports - reports the banks must file - stating that they no longer hold group shares as security for loans. But The Ken can't find such reports - therefore the conclusion is that the shares are still held as security against loans and the loans, therefore, have not been paid off.
Now, this could be just that The Ken can't find those extant documents. Or that the banks are tardy in filing them. Or, of course, that the loans have not been paid off and the security released. Which of those is true is going to be the significant determinant of all of the different Adani Group shares in the near future.
