In January 2023, U.S.-based short-seller Hindenburg Research released a damning report alleging stock manipulation and accounting fraud by the Adani Group, one of India’s largest conglomerates. The fallout from the report was immediate and severe, wiping out over $100 billion from Adani companies’ market capitalization in less than a month.
The report accused the Adani Group of artificially inflating stock prices and using shell companies to move funds illicitly. It also questioned the debt levels and corporate governance practices across various Adani firms, including Adani Enterprises, Adani Green, and Adani Ports. The group, led by billionaire Gautam Adani, denied all allegations, calling the report "malicious" and "unfounded," but investors reacted swiftly and harshly.
Adani Enterprises was forced to cancel its $2.5 billion follow-on public offering (FPO), even after full subscription, amid plunging stock prices. Credit rating agencies issued warnings, and several global banks, including Credit Suisse and Citigroup, stopped accepting Adani bonds as collateral.
The Indian government and regulators, including the Securities and Exchange Board of India (SEBI), faced pressure to investigate the allegations. The Supreme Court of India eventually appointed an expert committee to examine regulatory lapses, while SEBI launched its own probe into offshore fund flows and possible price manipulation.
Despite the turbulence, Gautam Adani reiterated his commitment to transparency and debt reduction. The group pre-paid over $2 billion in loans to restore investor confidence and initiated several corporate governance reforms.
The controversy highlighted the concentration of corporate power in India and triggered a broader debate about regulatory oversight, transparency, and the risks of over-leverage in conglomerate-driven economies. It also led opposition parties to demand more disclosures and scrutiny, particularly because of Adani’s perceived proximity to the political establishment.
While some of Adani’s businesses have since recovered partially, investor trust remains shaken. The incident underscores the importance of robust regulatory systems and transparent corporate practices in maintaining market integrity.