The 413-page attempt by billionaire Gautam Adani to win back investors’ faith in his corporate empire is failing as stock market losses widen and important US dollar bonds hit new lows.

Despite the Indian conglomerate’s extensive weekend denial of fraud charges made by short-seller Hindenburg Research, shares of all Adani Group companies fell on Monday. As a result of the three-day sell-off, the market value of Adani’s flagship company has decreased by around US$72 billion (S$94 billion), which was intended to highlight the tycoon’s rise to prominence internationally.

The dispute is renewing long-standing investor concerns about the conglomerate’s corporate governance, despite the Adani Group’s portrayal of Hindenburg’s accusations as unfounded and an attack on India itself. Additionally, it poses a risk of undermining public confidence in India, which was until recently one of Wall Street’s top investment destinations, and accelerating the transition toward a reopened China.

“I’m not convinced if Adani’s refutation will suffice to allay investor worries. According to Brian Freitas, an analyst at Smartkarma, just because something is public and known does not mean it is correct. “How does a company that size explain not having any analyst coverage and holding any mutual funds?”

In a 100-page report that Hindenburg released on January 2, the company claimed that its two-year investigation had uncovered “brazen stock manipulation and accounting fraud.” Additionally, the conglomerate’s “considerable debt” was mentioned.

The Adani Group argued in its response, which was published on Sunday, that 65 of the 88 questions in Hindenburg’s report had been answered in the conglomerate’s public filings and that the short-actions sellers were “nothing short of a premeditated securities fraud under applicable law.” It reaffirmed that it would exercise its right to “seek remedies to protect our interests before the applicable authorities.”

In the most recent turn of events, Hindenburg claimed that Adani’s response overlooked all of its main accusations and was “obscured by nationalism.”

The conglomerate’s statement, according to the short-seller, confused the company’s “meteoric ascent” and the fortune of Asia’s richest man “with the success of India itself” and failed to properly address 62 of Hindenburg’s 88 queries.

After his equities were among the strongest performers last year, both on the local market and the more comprehensive MSCI Asia Pacific Index, the slump is quickly eroding the wealth of Mr. Adani, Asia’s richest man.

All out

Adani Total Gas and Adani Transmission both fell as much as 20% on Monday as the general sell-off persisted.

The company’s flagship Adani Enterprises also lost its early 10% gain, trading 2% lower. Shares of it continue to trade below the follow-on equity offering floor price. The business wants to raise $2.5 billion in dollars.

Investors in Indian public offerings normally don’t submit bids until the very final day of the sale, but there are worries that the Hindenburg assault has soured the mood.

Just 2% of shares were subscribed overall as of Monday at 13:42 PM in Mumbai for Adani Enterprises’ share sale, which closes on Tuesday. Retail investors placed bids for 3% of the shares available to them, while firm personnel placed bids for 10% of the shares available to them. The non-institutional portion, which consists of affluent people, had been occupied to the extent of 1%. A small portion of the 12.8 million shares up for bid, or 4,576, were placed by institutional investors.

Adani debts come under scrutiny

On Monday, the drop in the Adani Group companies’ dollar bonds accelerated. The 2027 note issued by Adani Ports & Special Economic Zone Ltd. lost 6.2 cents, according to data collated by Bloomberg.

A minimum of four group notes, including the debt owed by Adani Electricity Mumbai, have dropped to distressed levels below 70 cents on the dollar, a sign of rising creditworthiness worry.

According to Charu Chanana, a strategist at Saxo Capital Markets, “the risk-reward for Indian markets has just taken a turn for the worst.” “I would be rather cautious since foreign investor confidence has been damaged and will take time to recover. India already began trading this year at a premium to other emerging markets, but the Adani scandal has once again raised doubts about whether that is justified.

Dollar note coupon payments totaling at least US$289 million are due from Adani Group firms in 2023. First, Adani Ports & Special Economic Zone must pay a total of US24.7 million in interest on three debts by this Thursday.

No indication has been made that the Adani firms would have difficulty making these payments, and Adani has highlighted interest coverage ratios that demonstrate it has the resources to fulfill such obligations.