Corporate Grapevine     

Published: Feb 15, 2023
Updated: Feb 15, 2023

Have Adani’s chickens come home to roost?

US short-seller Hindenberg’s research report, released on the eve of Adani group flagship Adani Enterprises’s share sale, has played havoc in the market with Adani group stocks tanking by $111 billion (Rs 8,76,525 crore). The extremely poor public response to the FPO and the last-minute rain of funds into the issue, followed by the sudden withdrawal of the FPO, only added fuel to the fire of controversy surrounding the Adani conglomerate. With investor confidence in the group plunging to an all-time low, the management’s assurances about its financial health have fallen on deaf ears and the selling pressure on the group’s shares continues unabated.

Adani group backers around the world are trying to gauge their exposure to the Adani conglomerate. Financial institutions that have backed the group, including Citigroup, Credit Suisse and Barclays, are looking at ways to reduce their exposure to the group. Back home, the RBI is also looking into Indian banks’ exposure to the Adani group.

Significantly, even after a week, Adani group stocks have continued to witness a bloodbath on Dalal Street and have by now fallen by over 26.70 per cent.

BEHIND THE FIRE

The Adani fiasco has even rocked Parliament, with opposition parties demanding stern action over the alleged scam. On the flip side, many business leaders, though not happy with the dramatic rise of the Adani group, have started questioning Hindenberg. They say that if Hindenberg – with no skin in the game – is allowed to play havoc in the Indian stock market, it could attack anyone tomorrow, as all Indian industrialists are not ‘Tatas’.

The short seller’s attack on the Adani group is being seen as an attack on retail investors who have made sizeable gains in Adani shares in the last three years, business leaders say. Apart from Sajjan Jindal, Sunil Mittal and the Mehtas of Torrent, several high net worth Indians invested their money in the FPO. The current thinking now is to ‘ring fence’ India Inc from ‘foreign attacks’. As many of these attacks are seen as part of economic warfare, the Indian government may well come out with rules to prevent such attacks on Indian business leaders. The government is also reportedly planning to expose local players who helped Hindenburg to do a ‘hit job’ on the Adani FPO.

SEBI’S SILENCE

However, several trade, industry and investor circles fail to understand why SEBI has been silent over such serious allegations. In its over 100-page report, Hindenberg has alleged massive fraud and stock manipulation and has also accused Adani of “pulling the largest con in corporate history.”

Interestingly at a time when the entire world has taken these allegations seriously, SEBI, which was established to protect the interests of investors, is seen as sleeping over the allegation of stock manipulation by the Adani group.

The ball is now in Prime Minister Modi’s court. He needs to break his silence over the issue and the government should immediately take steps to investigate the serious allegations against the group of the erstwhile richest person in Asia.