Not Adani Group, Hindenburg Research’s first report was on this Indian company

Hindenburg Research, the US-based short-seller now set to close, gained significant attention in the Indian media following its 2023 report on the Adani Group followed by SEBI chairperson Madhabi Puri Buch.

Interestingly, this wasn’t Hindenburg’s first time targeting an Indian company. Back in August 2017, shortly after its inception, the firm released its initial investigative reports on Eros International, a US-listed Indian film company, followed by a 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 International: On-The-Ground Research, Employee Interviews, and Private Company Documents Expose Egregious Accounting Irregularities,’ was published on June 7, 2019.

The reports accused the company of having major accounting problems, including the following:

• Undisclosed related party transactions, such as how it allegedly directed $153 million to what was supposed to be a production company run by the brother-in-law of Eros’ Chairman and CEO, which was found out to be operating out of a small office in a Mumbai slum.

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• A large balance of uncollected money from its debtors possibly indicating ’round tripping,’ a method used to inflate company metrics artificially.

Falsified revenue, with its day’s sales outstanding (DSO), indicating almost a year’s worth of revenue was booked but never collected.

Eros International sued Hindenburg for the report, but its lawsuit was dismissed, and in January 2023, the company was removed from the New York Stock Exchange (NYSE).

Even SEBI confirmed many of Hindenburg’s findings close to 8 years after its reports on it came. The domestic market regulator imposed fines and banned Eros’s promoter and managing director, Sunil Lulla.

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What happened to Hindenburg Research?

Hindenburg Research founder Nathan Anderson officially announced the firm’s closure on Wednesday, January 15, 2025, stating in a post that he intends to focus on his personal life more and views Hindenburg “as a chapter in my life, not a central thing that defines me.”

“Nearly 100 individuals have been charged civilly or criminally by regulators at least in part through our work, including billionaires and oligarchs,” he wrote. “We shook some empires that we felt needed shaking.”