Court should check 'truthfulness' of Hindenburg report on Adani: Government

By Nikunj Ohri and Arpan Chaturvedi

BENGALURU/NEW DELHI (Reuters) -The Indian government has told the country's top court that the "truthfulness" of allegations made by a U.S. short seller against the Adani Group should be examined, according to a government filing seen by Reuters.

The Supreme Court is yet to issue an order on setting up a panel proposed to examine investor protection mechanisms in the wake of Hindenburg Research's Jan. 24 report.

Seven listed firms of the Adani Group have shed some $125 billion in market value since the report which alleged improper use of tax havens and stock manipulation by the ports-to-energy conglomerate.

The Adani Group has denied wrongdoing.

Any panel should "have all the powers to undertake an effective investigation... including every authority and powers to avail all assistance and protocols for its investigation outside India," the government told the top court on Friday.

The panel should "ascertain and submit a report regarding the truthfulness or otherwise of the allegations made against Adani group of companies".

It should also examine the legality of Hindenburg's short positions on Adani Group's debt and equity instruments, the government filing said.

During a hearing on Friday, the government said its suggestions should be kept under sealed cover, but the court said it wants to maintain full transparency on setting up of the panel.

India's markets regulator told the top court earlier this week that it was looking into the short seller's allegations and into market activity immediately before and after the report.

Asia Index said on Friday it would drop Adani's two recent cement acquisitions - Ambuja Cements Ltd and ACC Ltd - from the S&P BSE 100 ESG Index from Feb. 22.

The Adani Group has sought to allay investor concerns.

The Economic Times newspaper reported on Friday that the conglomerate plans to completely pre-pay all loans against shares over the next 20 days.

Adani Group did not immediately respond to Reuters' request for comment on the report.

The group's renewable energy arm, Adani Green Energy, plans to disclose its refinancing plan after the fiscal year ends, an executive of the group told bondholders on a call on Thursday, sources told Reuters.

Avinash Gorakshakar, head of research at Profitmart Securities, said the refinancing plans were positive for sentiment, but the group's stocks would continue to remain volatile.

"What we'll need to know is how they are going to fund their future growth plans. Fresh funding is not going to come easy," he said.

Adani Green Energy bonds due in 2024 and offering a 4.375% coupon jumped on Thursday to 84.5 cents on the dollar from 75 cents a day earlier, Tradeweb data showed.

Adani Green shares closed up 2% on Friday, after losing nearly 70% since the Jan. 24 report. Adani Power climbed 5%, while Adani Ports and Special Economic Zone ended up 0.25%.

Adani Group's flagship firm, Adani Enterprises, closed down 4.1%, while Adani Total Gas shares, which have been hit the hardest by the report, ended down 5%.

(Reporting by Nikunj Ohri and Arpan Chaturvedi in New Delhi, and Chris Thomas and Nallur Sethuraman in Bengaluru; Writing by Shivam Patel; editing by Alex Richardson and Jason Neely)