The Hindenburg Adani Saga raises more questions than answers as it throws”Light” On “Dark” Places Of The Way Things Work In India!

Anyone following the events in India’s business and finance world wouldn’t have missed the BIG story surrounding the Adani “way” of doing things. For those needing some background and context, the activist short seller firm, Hindenburg Research, has raised “serious” questions about the alleged “dubious” business practices of the Adani group, ports to power conglomerate synonymous with the “rise” of New India. The former, led by Nate Anderson, and the latter, helmed by Gautam Adani, a self-made, first-generation Billionaire who is also Asia’s richest man and the world’s third wealthiest person, has been engaged in a “war of words” over the research firm shining a “light” on the “dark” places on the way Adani and by extension, India Inc. operate.

Adani is mulling legal action against Anderson and Hindenburg at the time of writing, so it is still “early” days to tell which way this saga will go and the eventual outcome that would ensue. However, with the knowledge of the initial allegations and Adani’s response, there are more questions than answers, which is ideally not the best way to go. More so, when Hindenburg has accused the Adani group of “brazen” misconduct and has termed its businesses as the “largest con in the history of the corporate world”. Though the allegations are shocking on paper, the Indian Twitterati and parts of the Indian media do not seem too “surprised” given the “nudge, nudge, wink, wink” way in which “things work” in India.

Moreover, this is not the first time Adani has been accused of such behaviour; perhaps, it wouldn’t be the last. However, even those “in the know” are taken aback by the “gravity” of the allegations, given that Hindenburg seems to have done its “due diligence” well. Of course, it is another matter that nothing might come out of this with “business as usual” restored after the proverbially short memory of the Indian public. More so, when India is one of the Asian nations, South Korea and other Asian tigers being the rest, that has historically been a fertile ground for family-owned businesses with not-so-transparent corporate governance records and, at times, downright malfeasance.

Adani and its group companies have been “sinking” on the bourses for the second consecutive trading day (the allegations were made on Jan 25th, and with Jan 26th being a holiday, today is the second day of trading after the news broke). Indeed, at the close, most Adani firms seem to have taken a “hit” to up to 20% on the Sensex and the Nifty, and so, there seem to be signs of some “nervousness” among investors and traders. Maybe, the saying “there’s no smoke without fire” is the best way to describe the unfolding situation. However, there is also the possibility that the threat of legal action and the “deep pockets” of the Adani group, and especially its promoter, would help it “ride” the “storm” with little eventual damage.

Whatever the outcome, it is clear that there needs to be clarity on sources of funding and especially on India’s markets, as otherwise, the narrative of a “rising” India and the “next big thing” of the Indian economy would not quite rhyme well including taking some “sheen” of the India “shining” pitch. For the interests of all, including we bystanders, with little or no exposure (monetary or technical) to the Indian markets, perhaps this shining of “light” is good in the longer term. On the other hand, I concur with the view that most retail investors would “shrug” this off, and the everyday Dhanda and the Jugaad would continue with just a short “break” due to this “breaking news”. To paraphrase Charles Dickens, These are the best of times and the worst of times! Amen!


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