(Bloomberg) -- Billionaire Gautam Adani’s 413-page attempt to restore confidence in his business empire is falling flat with investors, as stock-market losses deepen and key dollar bonds sink to fresh lows.

Shares of most Adani firms slumped on Monday despite the group’s lengthy weekend rebuttal to allegations from Hindenburg Research that the Indian conglomerate used a web of companies in tax havens to inflate revenue and stock prices even as debt piled up. The three-day selloff has now erased more than $68 billion of market value amid a share sale by Adani’s flagship that was meant to underline the tycoon’s ascension on the global stage.

While the Adani Group has portrayed Hindenburg’s allegations as baseless and an attack against India itself, the saga is reviving longstanding investor concerns about the conglomerate’s corporate governance. It also threatens to weaken broader confidence in India, until recently a top investment destination for Wall Street, and accelerate a nascent shift toward a reopening China.

“Not sure if Adani’s rebuttal is enough to assuage investor concerns. Just because things are disclosed and known does not make them right,” said Brian Freitas, an analyst at Smartkarma. “How does a group that big explain no analyst coverage and no mutual fund holdings?”

Hindenburg published a report last week accusing the Adani group of “brazen” market manipulation and accounting fraud. The wide-ranging allegations of purported corporate malpractice spoke of a web of Adani-family controlled offshore shell entities in tax havens, from the Caribbean, Mauritius and the United Arab Emirates.

In its rebuttal published Sunday, Adani said that some 65 of the 88 questions raised by Hindenburg have been addressed in the conglomerate’s public disclosures, describing the short seller’s conduct as “nothing short of a calculated securities fraud under applicable law.” The group reiterated it will “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.”

READ: Hindenburg Says Adani’s Nationalist Rebuttal Ignores Allegations

Hindenburg then said Adani’s rebuttal ignored all its key allegations and was “obfuscated by nationalism.” The conglomerate’s statement failed to specifically answer 62 of Hindenburg’s 88 questions, the short seller said Monday, and conflated the company’s “meteoric rise” and the wealth of Asia’s richest man “with the success of India itself.”

Adani’s stocks were some of the best performers last year not just in the local market, but also on the broader MSCI Asia Pacific Index.

The selloff that began last week broadly continued on Monday, with Adani Total Gas Ltd. and Adani Green Energy Ltd. down as much as 20%. The flagship Adani Enterprises traded volatile, briefly erasing an early gain of as much as 10% before closing up 4.8%. 

Still, Adani Enterprises’ shares remain below the floor price set for the follow-on equity sale. The company is seeking to raise 200 billion rupees ($2.5 billion).

Overall subscription for the share offer by Adani Enterprises, which closes on Tuesday, was at just 2% as of 16:27 p.m. in Mumbai on Monday. Retail investors had bid for 4% of the shares on offer to them, while the company’s employees bid for 12% of the shares for their category. The non-institutional part that includes wealthy individuals had been taken up 1%. Institutional investors bid for 4,576 shares, a fraction of the 12.8 million on offer.

While investors in Indian public offerings typically wait until the last day of the sale to place bids, concerns have risen that Hindenburg’s report will hurt sentiment.

There will be no change to the pricing of the additional share sale and it will proceed as scheduled, Adani Group CFO Jugeshinder Singh told news channel CNBC TV 18 in an interview.

‘Turn for Worse’

Meanwhile, a decline in the dollar bonds of the Adani Group companies quickened on Monday. Adani Ports & Special Economic Zone Ltd.’s 2027 note dropped 5 cents, Bloomberg-compiled data show.

Several bonds issued by group companies, including the 2032 note of Adani Ports and Special Economic Zone Ltd., have dropped below the 70-cents-on-the-dollar mark typically considered distressed.

Hindenburg Research’s attack on the Adani Group has also sparked a flurry of bets in the options markets, with a wide divide between those behind the short seller and others predicting a rebound in the shares.

Open interest — a measure of outstanding positions in call and put options — surged as some investors sought protection against the wild swings in the group’s shares.

“The risk-reward for Indian markets has just taken a turn for the worse,” said Charu Chanana, a strategist at Saxo Capital Markets. “Foreign investor confidence has been dented and will take time to repair, so I would be rather cautious. India anyway started this year trading at a premium to other EMs, and the Adani saga has once again questioned whether that is justified.”

Hindenburg last week said it had taken a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivative instruments. Here’s a quick rundown of some of their main allegations:

• Identified 38 Mauritius shell entities controlled by Adani’s brother, Vinod Adani, or his close associates plus entities controlled by him in other tax havens.
  • The offshore shell network seems to be used for earnings manipulation.
• Adani Group has previously been the focus of four major government investigations relating to allegations of fraud.
• Adani Enterprises and Adani Total Gas Ltd. appear to be audited by a tiny firm, with no current website, only four partners and 11 employees, and which has audited just one other listed firm.
  • The auditor “hardly seems capable of complex audit work” when Adani Enterprises alone has 156 subsidiaries and many more joint ventures.

--With assistance from Finbarr Flynn, Devidutta Tripathy, Anders Melin, Abhinav Ramnarayan and Bhuma Shrivastava.

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