US-based short-seller Hindenburg Research, currently scheduled to shut down, has made headlines in the Indian media after SEBI Chairman Madhavi Puri Buch announced a 2023 report on the Adani Group. It attracted attention.
Interestingly, this was not the first time Hindenburg targeted Indian companies. Back in August 2017, shortly after its founding, the company released its first research report on Eros International, a US-listed Indian film company, followed by its third report two years later.
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The first Eros Earnings Review: An Abundance Of Red Flags was published on August 2, 2017. The second, Eros International: New Receivables Accounting Red Flags, was published on August 24, 2017. The third “Eros” was published on June 7, 2019, “International: Field Investigations, Employee Interviews, and Private Company Documents Reveal Significant Accounting Fraud.”
The report accused the company of having serious accounting problems, including:
It includes undisclosed transactions with related parties, including how $153 million was directed to what appears to be a production company run by the brother-in-law of Eros’ chairman and CEO. , it turns out that the company operates out of a small office in New York. Mumbai slums.
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Large outstanding balances from debtors may be indicative of “round-tripping,” a technique used to artificially inflate a company’s metrics.
The falsified revenue and day’s unpaid sales (DSO) show that nearly a year’s worth of revenue was recorded but never collected.
Eros International sued Hindenburg over the report, but the suit was dismissed and the company was removed from the New York Stock Exchange (NYSE) in January 2023.
Even SEBI confirmed many of Hindenburg’s discoveries nearly eight years after the Hindenburg report came out. The domestic market regulator imposed a fine and banned Eros promoter and managing director Sunil Lulla.
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What happened to the Hindenburg studies?
Hindenburg Research founder Nathan Anderson formally announced the company’s closure on Wednesday, January 15, 2025, saying he intended to focus more on his personal life and calling Hindenburg “the central thing that defines me.” Instead, I see it as a chapter in my life,” he said in the post. ”
“Nearly 100 people, including billionaires and oligarchs, have been indicted civilly or criminally by regulators at least in part through our activities,” he wrote. “We shook up some empires that we felt needed to be shaken up.”
