By Jayshree P Upadhyay, Aditya Kalra and Aditi Shah

NEW DELHI (Reuters) -India’s Adani Group issued an in depth riposte on Sunday to a Hindenburg Research report that sparked a $48 billion rout in its shares, saying it complies with all native legal guidelines and had made the mandatory regulatory disclosures.

The conglomerate led by Asia’s richest man, the Indian billionaire Gautam Adani, mentioned final week’s Hindenburg report was meant to allow the U.S.-based brief vendor to e-book good points, with out citing proof.

For 60-year-old Adani, the inventory market meltdown has been a dramatic setback for a school-dropout who rose swiftly in recent times to change into the world’s third richest man, earlier than slipping final week to rank seventh on the Forbes wealthy checklist.

Adani Group’s response comes as its flagship firm, Adani Enterprises, pushes forward with a $2.5 billion share sale. This has been overshadowed by Hindenburg’s report, which flagged issues about debt ranges and the usage of tax havens.

“All transactions entered into by us with entities who qualify as ‘related parties’ under Indian laws and accounting standards have been duly disclosed by us,” Adani mentioned within the 413-page response issued late on Sunday.

“This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors,” it added.

Hindenburg didn’t instantly reply to a request for touch upon the Adani response on Sunday.

Its report had questioned how the Adani Group has used offshore entities in tax havens resembling Mauritius and the Caribbean islands, including that sure offshore funds and shell corporations “surreptitiously” personal inventory in Adani’s listed companies.

The analysis report, Adani mentioned, made “misleading claims around offshore entities” with none proof in anyway.

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Adani mentioned on Thursday that it’s contemplating taking motion in opposition to Hindenburg, which responded on the identical day by saying it will welcome such a transfer.

Hindenburg’s report additionally mentioned 5 of seven key listed Adani corporations have reported present ratios, a measure of liquid belongings minus near-term liabilities, of under 1 which it mentioned urged “a heightened short-term liquidity risk”.

It mentioned key listed Adani corporations had “substantial debt” which has put your complete group on a “precarious financial footing” and that shares in seven Adani listed corporations have an 85% draw back because of what it known as “sky-high valuations”.

Adani’s response acknowledged that over the previous decade, its group corporations have “consistently de-levered”.

Defending its apply on pledging shares of its promoters – or key shareholders – the Adani Group mentioned that elevating financing in opposition to shares as collateral was frequent apply globally and loans are given by massive establishments and banks on the again of thorough credit score evaluation.

The group added there’s a strong disclosure system in place in India and its promoter pledge positions throughout portfolio corporations had dropped from greater than 50% in March 2020 in some listed shares, to lower than 20% in December 2022.

‘SAIL THROUGH’

The Hindenburg report, and its fallout, is seen as one of many greatest profession challenges to face the billionaire, whose enterprise pursuits vary from ports, airports, mining and energy to media and cement.

Adani’s response included greater than 350 pages of annexes that included snippets from annual experiences, public disclosures and earlier courtroom rulings.

Hindenburg, Adani mentioned, had sought solutions to 88 questions in its report, however 65 of them have been associated to issues which were disclosed by Adani portfolio corporations in annual experiences.

The relaxation, Adani mentioned, relate to public shareholders and third events, and a few have been “baseless allegations based on imaginary fact patterns”.

Hindenburg, identified for having shorted electrical truck maker Nikola Corp and Twitter, mentioned it holds brief positions in Adani corporations by means of U.S.-traded bonds and non-Indian-traded spinoff devices.

Adani additionally responded to allegations by Hindenburg referring to the corporate’s auditors, saying “all these auditors who have been engaged by us have been duly certified and qualified by the relevant statutory bodies.”

Its response comes simply hours forward of India market opening, when the $2.5 billion secondary share sale begins its second day of subscription. Friday’s plunge took Adani Enterprises shares under the problem value, elevating doubts about its success.

In a separate assertion on Sunday, Adani Group’s chief monetary officer Jugeshinder Singh mentioned it’s targeted on the share sale and is assured it should succeed. He additionally mentioned its anchor traders have proven religion and stay invested.

“We are confident the FPO (follow-on public offering) will also sail through,” he mentioned.

(Reporting by Aditya Kalra, Aditi Shah, Jayshree Upadhyay and Anirudh Saligrama in Bengaluru; Editing by Kevin Liffey and Alexander Smith)