Asia's richest man Gautam Adani in huge trouble after the fraud claims made by a small US Firm Hindenburg Research.

Asia's Richest Man in Trouble

             Asia's richest person Gautam Adani has once again landed in a huge controversy after an American investment firm Hindenburg Research claimed that Adani Group is indulged in fraud schemes. On 24 January, Hindenburg Research released a report that casted doubts on Adani's business practices. Adani Group dismissed the report next day, but this was not enough to satisfy the investors. Adani Group has lost more than $65 Billion till now as the investors fled his companies prompted by the allegations. Adani lost a huge portion of his wealth, and also the status of being world's third richest person. In this article, we will discuss the whole issue in detail.

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What does the report say?

           The report titled "Adani Group: How The World's Third Richest Man Is Pulling The Largest Con In Corporate History" claims that Adani Group is indulged in accounting fraud schemes and stock manipulation. The report also says that the Adani family has built a number of "offshore shell entities" in the countries like Cyprus, and the UAE to avoid taxes.

          The report claims that the stock valuations of Adani Group's seven listed companies are 85% overvalued, and the promoters of the group hold more than 75% share-limit fixed by Indian government in four of the companies.

Photo by Markus Winkler on Unsplash

           Hindenburg Research is an New York-based investment firm founded in 2017. This firm employs former journalists and analysts, and it has previously exposed the wrongdoings of several other companies too. According to some reports, the firm makes money by betting that the stocks of their targeted companies with fall after the firm publishes their report. 

Adani Group's reaction:

            Adani Group released a statement on 25 January, a day after the report was published, saying that the group was shocked that the report was released without contacting the company or verifying the figures. Adani Group said:

            "The report is a malicious combination of selective misinformation and baseless allegations that have been tested and rejected by India's highest court." 

            The group also said that the report was intended to have adverse effects on the share prices of Adani Group companies. Adani Group announced that a legal action would be taken against the firm under the US and Indian laws. 

Adani Group's loss:

            The report was rejected by Adani Group a day after its release, but this couldn't pacify the investors. Over three days, the market loss rose to $65 Billion and Gautam Adani faced a huge decline in his personal wealth.

Photo by Markus Spiske on Unsplash

            

            Here's the list of Adani Group's companies and the drop in their share prices:

• Adani Transmission, Adani Total Gas and Adani Green Energy lost 20% of share values on 27 January.  
• Adani Ports and Adani Wilmar also faced a decline in their share prices.
• Adani Enterprises lost 18% of its share value just days after the report was released.

           Overall, this was the Adani Group's biggest loss since 2017. Adani Group witnessed a huge rise in recent years and Gautam Adani became world's third richest person leaving Bill Gates and Warren Buffett behind. Considering the growth of Adani's business, Financial Express estimated earlier this month that Gautam Adani would leave Elon Musk behind in just a few days to become world's second richest man. But the net worth of Adani has now decreased to around $87 Billion (which was above $120 Billion just a week ago) pushing him to the eleventh spot on richest people list at the end of January.

           Gautam Adani was born in a middle-class family of Gujarat, India in 1962. He took admission for a bachelor's degree at Gujarat University, but he was dropped out after the second year but his interest in business led him to become a diamond merchant and then later, he established Adani Exports (today known as Adani Enterprises).

What's Next?

            This situation would be challenging for Gautam Adani as the share prices are falling and investors aren't confident. Also, India's main opposition party Congress has demanded an investigation. The future of  Adani Group now depends upon its legal approach and inquiry of the issue. If any delay occurs, it will be a disaster for the company as the share prices are dropping sharply. That was it for today's article. We hope you liked it. If you did, share it with others and make sure you keep visiting "World Articles". You can find out more of these interesting articles and latest global news by clicking here.