On Sunday, Adani Group responded unsubstantiated allegations and misleading
narrative peddled by Hindenburg Research at length in an over 400-page response
backed by relevant documents. Adani Group’s response also raises the questions
against the ulterior motives and modus operandi of Hindenburg that has conveniently
ignored the Indian judiciary and regulatory framework.

The detailed response from Adani Group covered its governance standards, credentials,
creditworthiness, best practices, transparent conduct, financial & operational
performance and excellence. The Hindenburg report has been made with a clear intent
to profiteer at the cost of our shareholders and public investors. Its report is neither
“independent” nor “objective. It is a manipulative document that is rife with conflict of
interest and intended only for creating a false market in securities to book wrongful
gain, which clearly constitutes securities fraud under Indian law.

Of the 88 questions posed by Hindenburg, it is pertinent to note that 68 refers to the
matters that have already been duly disclosed by Adani Group companies in their
respective annual reports, offering memorandums, financial statements and stock
exchange disclosures from time to time. Sixteen out of 20 questions are pertaining to
public shareholders and their sources of funds, while the balance four are simply
baseless allegations. Needless to say that Hindenburg has created these questions to
divert the attention of its target audience while managing its short trades to benefit at
the cost of investors.

The report claims to have undertaken a “2-year investigation” and “uncover evidence”,
but comprises of nothing other than selective and incomplete extracts of disclosed
information which has been in the public domain for years. We take serious objection
to Hindenburg that chose to mislead the investors, watchdogs and policy makers at a
time when Adani Group has launched country’s largest FPO.

Adani Group is deeply committed to its stakeholders, and it is thankful to them for
standing with us over the past 30 years. Shockingly, Hindenburg Research’s attack on
the trust of Adani Group’s stakeholders undermines its commitment for the ‘Growth
with Goodness’. Hindenburg Research has come up with a document covering selective
and twisted extracts of already disclosed information to raise questions in the minds of
Indian and global investors to mislead them about Indian growth story. It is an attack
on the trust of Adani Group’s stakeholders undermines its commitment for the ‘Growth
with Goodness’.

EXTRACTS OF ADANI GROUP’S RESPONSE TO HINDENBURG

Our Response to the Allegations

Not one of these 88 questions is based on independent or journalistic fact
finding. They are simply selective regurgitations of public disclosures or
rhetorical innuendos colouring rumours as fact.

The report seeks answers to “88 questions” – 65 of these relate to matters
that have been duly disclosed by Adani Portfolio companies in their annual
reports available on their websites, offering memorandums, financial
statements and stock exchange disclosures from time to time. Of the balance
20 questions, 18 relate to public shareholders and third parties (and not the
Adani portfolio companies), while the balance 5 are baseless allegations based
on imaginary fact patterns.

Nonetheless, we have responded to all these questions, to the best of our
ability, summarised below:

Disclosed, discredited and disproven allegations: Allegations no. 1, 2, 3,
27, 28, 29, 30, 31, 72, 73, 74, 75, 76, 77, 78, 79, 80 present no new
findings and only dredge up allegations, which have been judicially
disproven and have also been disclosed by us to our investors and the
regulators.

By way of an example, there are multiple false narratives being created
in relation to certain allegations concerning diamond exports, which
matters have all been closed by the Appellate Tribunal (CESTAT) in our
favour. This decision has been further confirmed by the Supreme Court
itself twice over, a fact which has been deliberately ignored and
concealed in the Hindenburg report (which shockingly raises questions
on the competence of the Appellate Tribunal with baseless claims that it
has ignored evidence).

Baseless allegations around transactions which are in fact, compliant
with law, fully disclosed and on proper commercial terms: Allegation no.
9, 15, 19, 24, 25, 32, 33, 35, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51,
53, 54, 55, 56, 57, 58, 59, 60, 61, 81, 82 & 83 are again a selective
regurgitation of disclosures from the financial statements of Adani
entities to paint a biased picture. These disclosures have already been
approved by third parties who are qualified and competent to review
these (rather than an unknown overseas shortseller) and are in line with
applicable accounting standards and applicable law.

In fact, the mala fide intent of Hindenburg can be clearly seen from it
peddling structures that would not be in compliance with corporate
governance. By way of example, a fully disclosed transaction (see
allegation 61 of the Hindenburg Report) of Adani Enterprises with NQXT
to pay a standard security deposit (a common feature under long term
take or pay contracts) for use of terminals has been questioned.
Hindenburg seems to suggest that NQXT (a corporate entity in its own
right and subject to its own regulations) should provide Adani
Enterprises long term terminals for no charges at all – a transaction that
would amount to providing a benefit to a related party without arm’s
length terms.

In another instance (allegation 41 of the Hindenburg Report), they have
falsely claimed that Emerging Market Investment DMCC gave a loan of
USD 1 billion to Mahan Energen. The simple fact of the matter is that
Emerging Market acquired the USD 1 billion “unsustainable debt” of
Mahan Energen from its lenders for USD 100 as part of a resolution
plant duly approved by the National Company Law Tribunal under the
Indian Bankruptcy Code. These are mala fide attempts to question bona
fide transactions, the details of which are fully disclosed and available in
the public domain, to create doubt in the minds of our stakeholders and
the public.

Misleading claims around offshore entities being allegedly “related
parties” without regard for applicable law and standards: Allegation no.
4, 36, 37, 38, and 39 from the report are in reference to offshore
entities. The queries make reckless statements without any evidence
whatsoever and purely on unsubstantiated speculations without any
understanding of the Indian laws around related parties and related
party transactions.

False suggestions based on malicious misrepresentation of the
governance practices in Adani portfolio : Allegation no. 34, 62, 63, 64,
65, 66, 67, 68, 69, 70, and 71 use selective information to make
insinuations, when in fact, the Adani portfolio has instituted various
corporate governance policies and committees including our Corporate
Responsibility Committee consisting solely of independent directors
tasked with keeping the Board of Directors informed about the ESG
performance of businesses. Our ESG approach is based on well-thought
out goals, commitments and targets which are independently verified
through an assurance process.

For instance, Hindenburg has claimed that the Adani portfolio entities
have had a “difficult time” retaining our CFOs and that this is a “red flag”.
The Hindenburg report conveniently fails to mention that none of the
resignation have ever been made pursuant to any alleged concerns
against any of the underlying companies.

Another example of where the report exposes its motives is the question
around “convoluted structures” and multiplicity of subsidiaries, while
failing to comprehend that in the infrastructure business, especially in a
sprawling geography like India, most large corporates operate in a
similar fashion because projects are housed in separate SPVs and these
need to be ring fenced from a lender perspective for limited recourse
project finance and in many cases on account of specific regulatory
requirements. As an example, transmission projects in India are awarded
under tariff based competitive bidding, in such bidding the successful
bidder has to acquire the SPV which is undertaking the project. Hence, it
is a regulatory requirement as part of the Electricity Act, 2003 and the
regulations of the Central Electricity Regulatory Commission to execute
projects in different SPVs.

Manipulated narrative around unrelated third party entities: Allegation
no. 5, 6, 7, 8, 10, 11, 12, 13, 14, 16, 17, 18, 20, 21, 22, 23, 26 and 52 from the
report seek information on our public shareholders. Shares of listed
companies on Indian stock exchanges are traded on a regular basis. The
listed entity does not have control over who buys / sells / owns the
publicly traded shares in the company. A listed company does not have
nor is it required to have information on its public shareholders and
investors.

Hindenburg deliberately ignores Indian legal processes and regulations
in their insinuations against us. For instance, they have raised several
questions around the offer for sale undertaken by Adani Green Energy
Limited in 2019 while maliciously ignoring the fact that in India the
process for OFS is a regulated process implemented through an
automated order book matching process on the platform of the stock
exchange. This is not a process which is controlled by any entity and the
purchasers are not visible to anyone of the platform.

Biased and unsubstantiated rhetoric: Allegation no. 84, 85, 86, 87, and
88 from the report are inherently biased statements around our
openness to address criticism with a window dressing to garb them as
questions. Criticism does not include the right to make false and
defamatory statement which could damage the interests of our
stakeholders. We continue to have the right to seek judicial remedy
before Indian courts when such interests are threatened, and in all
cases, we have exercised these rights in due compliance with law and
the judicial process.

Hindenburg has sought to spotlight selective media reporting while
deliberately ignoring judicial findings. For instance, in another twisting
of facts, Hindenburg questions why we sought to have a “critical
journalist” jailed. The fact of the matter is that he was never jailed in
connection with any proceedings related to us and in fact, a nonbailable warrant had been issued to him by the judge because he failed to appear before the court despite summons an was not complying with
the judicial process.

Portfolio Credit Highlights

Adani Portfolio companies have successfully and repeatedly executed an
industry beating expansion plan over the past decade. While doing so, the
companies have consistently de-levered with portfolio net debt to EBITDA ratio
coming down from 7.6x to 3.2x (Please see Chart A below), EBITDA has grown
22% CAGR in the last 9 years and debt has only grown by 11% CAGR during the
same period.

Equity Injection in the Adani Portfolio

Adani Portfolio has raised USD 16 bn equity under a systematic capital
management plan for all the Portfolio companies over the last 3 years as a
combination of primary, secondary and committed equity from marquee
investors like TotalEnergies, IHC, QIA, Warburg Pincus etc.

Banking Relationships

The portfolio has developed deep bank relationships with institutions such as
JP Morgan, Bank of America Merrill Lynch, Citi, CreditSuisse, UBS, BNP Paribas,
Deutsche Bank, Barclays, Standard Chartered, MUFG, DBS and Emirates NBD
among others. This has strengthened access to diverse funding sources and
structures. Adani Portfolio companies have demonstrated successful
syndication of the banking transactions, resulting in de-risking of the banks in
volatile markets. Case in point being Holcim’s Indian cement business
acquisition with international banks, and Navi Mumbai Airport and Kutch Copper
refinery with domestic banks.

Accounting Process, Centralized ERP governance mechanism and Reporting

system

Internal Financial control process and governance mechanism is facilitated and
monitored by the group based on five key pillars namely

a. Centralized ERP Governance Mechanism and Reporting System
b. Periodic internal and external reviews of various processes
c. Issuing Corporate guidelines and ensuring their adherence
d. Appointment of competent and reputed statutory auditors for all verticals
e. Capacity building programs for facilitating the controls

With these 5 pillars group ensures that highest standards of governance and
reporting is being maintained by all businesses across all verticals. Adani
Business Excellence Team (ABEX) is a centralized team which handles
accounting and financial controls of all companies across all verticals. These
processes have received various six sigma and ISO awards for maintaining
highest degree of compliances and governance.

Robust mechanism for scrutiny and audit, many CFOs have donned the new

roles within Adani Group

Adani Group companies also have a very strong audit process in order to prevent
any deviations from the regulatory obligations and highest legal standards. The
Audit Committee of each of the listed verticals is composed of 100% of
Independent Directors and chaired by Independent Director. The Statutory
Auditors are appointed only upon recommendation by the Audit Committee to
the Board of Directors. Adani Portfolio company’s follow a stated policy of
having global big 6 or regional leaders as Statutory Auditors.

Hindenburg has deliberately and repeatedly trivialised the change of CFOs to
twist this into a narrative. The fact is that many of the CFOs are still part of the
organisation in other capacities to take on larger responsibilities as part of our
growth stories. Others have left post retirement or to pursue their own
entrepreneurial endeavours and continue to work in our association. None of
the resignations have ever been made pursuant to any alleged concerns and
Hindenburg’s baseless narrative.

We reaffirm that Adani Group is in complete compliance with all applicable laws
and regulations and continue to retain all our rights to pursue remedies to
safeguard our stakeholders before all appropriate authorities. We reserve all
our rights to respond further to any of the allegations or contents of the
Hindenburg report or to supplement this statement.