Bharata Rashtra Samithi (BRS) MLC Kalvakuntla Kavitha on Monday demanded that a Joint parliamentary committee (JPC) should be formed to investigate Adani Group row.
Hyderabad,UPDATED: Feb 6, 2023 23:35 IST
File photo of Bharata Rashtra Samithi (BRS) MLC Kalvakuntla Kavitha.
By Apoorva Jayachandran : Bharata Rashtra Samithi (BRS) MLC Kalvakuntla Kavitha on Monday said that a Joint Parliamentary Committee (JPC) should be formed to investigate the fall of the Adani Group’s stock prices.
Kavitha, while speaking to the media at the Telangana Legislative Council premises said, “Today in the country we are facing a huge crisis. We should definitely call it a crisis as the fall of the Adani group’s shares and the value of the company will impact the country’s economy.”
MLC K Kavitha criticised the statement of Union Finance minister Nirmala Sitharaman who said that it would not impact the Indian economy.
The Adani group’s shares saw a massive downward spiral after a Hindenburg report found that the company’s valuation was inflated fraudulently.
“The value of shares of SBI and LIC that invested in the Adani Group has fallen sharply since January 23 till date. It has caused a severe loss to the common man. The share value of Adani on January 23 was Rs 3,436. Now the share value of the group has fallen to Rs 1,483 on February 6. The BRS party demands to form a Joint Parliamentary Committee in which every parliamentarian from all political parties can take part,” stated Kavitha.
Adding that there should be an impartial probe when something impacts the country so deeply, Kavitha stated, “It’s the responsibility of the prime minister morally and socially to speak out to the country and to the people so that Adani’s fiasco would not turn into an economical disaster.”
It is the moral of the prime minister of this country to speak to the people of the nation, Kavitha said.
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WITH JUST a day for its Rs 20,000 crore follow-on public offer (FPO) to close, Adani Enterprises Ltd, the flagship of the Adani Group, partially recovered Monday to end 4.2 per cent higher at Rs 2,878 a share, but continues to be at a 7-12 per cent discount to the FPO price band of Rs 3,112-3,276 a share.
The Adani Enterprises stock had plunged 18 per cent on Friday, and 1.18 per cent on Wednesday.
The slide in the fortune of Adani Group and its founder Gautam Adani continued Monday as shares of four of the nine listed group companies hit the lower circuit and two others fell. The Sensex, which shed 631 points intra-day, recovered to close with a gain of 169.51 points, or 0.29 per cent, at 59,500.41, and the NSE Nifty Index gained 45 points at 17,648.95.
Besides Adani Enterprises, Ambuja Cements and ACC rose 1.65 per cent and 1.1 per cent, respectively. But the group, as a whole, witnessed an additional decline in its market capitalisation of Rs 1.36 lakh crore taking the aggregate decline in market cap over the last three trading sessions to Rs 5.56 lakh crore.
In line with the decline in fortunes of the group companies at the stock exchange, Gautam Adani too witnessed further decline in his personal wealth as he slipped to 8th spot in the Forbes billionaire list on Monday. His net worth declined by USD 8.1 billion on Monday to USD 88.6 billion.
In a statement, LIC, the state-owned insurer, said it has invested Rs 36,474.78 crore in Adani Group as on date, and its exposure was 0.975 per cent of the total assets under management (AUM) at book value.
The total purchase value of equity, purchased over the last many years, under all the Adani Group companies is Rs 30,127 crore and the market value for the same as on January 27, 2023 was Rs 56,142 crore, it said in a statement. LIC did not disclose the current market value of its equity investment (post meltdown since last Wednesday).
“These investments have, however, been made over a period. The credit rating of all of the Adani debt securities held by LIC are AA and above which is in compliance with the IRDAI investment regulations as applicable to all life insurance companies,” said LIC.
Shares of Ambuja Cement and ACC were also in the green and it is important to note that they were acquired by Adani only last year.
On the other hand, traditional Adani Group companies barring Adani Enterprises continued to remain under pressure with Adani Total Gas and Adani Green Energy falling by 20 per cent each and Adani Power and Adani Wilmar too hitting the lower circuit with a decline of 5 per cent each. Adani Transmission and Adani Ports were down 14.9 per cent and 0.3 per cent respectively at the end of Monday’s trading.
Adani’s response to the Hindenburg report had a mixed effect on the stock group and the market. “The saga is likely to continue as a hanging risk in the minds of the investors in the medium-term. To expect a scientific assessment report either by a strong independent third party or government is dim in the short-term. Now the focus of the market will be on the budget and the US Fed policy,” said Vinod Nair, Head of Research at Geojit Financial Services.
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Shares of Adani Group companies remained under pressure for the third straight session on Monday with majority of them witnessing a crash yet again. The deepening market rout has now led to losses worth $65 billion in the group’s stock values, according to a Reuters report. The current round of fall follows a report by Hindenburg Research last week which flagged concerns about the conglomerates debt levels and the use of tax havens. On Monday, Adani Transmission dropped 14.91%, Adani Green by 20%, Adani Total Gas by 20%, Adani Power by 5%, and Adani Wilmar by 5%. However, shares of flagship Adani Enterprises climbed 4.21% after its follow on public offer (FPO) was subscribed 2%. The developments also had an impact on the stock market which remained volatile during the entire session. Benchmark BSE sensex gyrated nearly 1,000 points intra-day before staging a smart comeback in late trades on selective buying. Adani rout hits $65 billion Adani Group’s lengthy weekend rebuttal to Hindenburg’s report did little to soothe investor sentiments today. The 3-day selloff has now erased nearly $65 billion 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 latter’s report is reviving longstanding investor concerns about the conglomerate’s corporate governance. The saga 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.
The selloff is also fast eroding the wealth of Adani, Asia’s richest man, after his stocks were some of the best performers last year not just in the local market, but also on the broader MSCI Asia Pacific Index. From being the 4th richest in the global billionaire rankings till Wednesday last week, Adani has now dropped to the 8th spot with a total net worth of $88.2 billion, as per the Forbes real time billionaires list. However, the Bloomberg Billionaires Index shows Adani at 7th spot with a wealth of $92.7 billion.
This is in sharp contrast to September last year, when Adani’s wealth had surged to over $155 billion, making him the 2nd richest person in global billionaires ranking and the first Indian (and Asian) to break into the top 3 list. In a little over two and half years, Gautam Adani‘s wealth had galloped over 13 times. In January 2020 just before the onset of Covid pandemic, his net worth was about $10 billion. In 1988, Gautam Adani had set up Adani Enterprises (then Adani Exports) to start a commodities trading business. Soon he set up Mundra port for captive export-import operations. Within a decade it also emerged as the biggest coal trading company in the country and one of India’s largest foreign exchange earners. Adani Group’s response to Hindenburg report The Adani group had on Sunday slammed the Hindenburg report and likened the damning allegations to a “calculated attack” on India, its institutions and growth story, saying the allegations are “nothing but a lie”. “Needless to say that Hindenburg has created these questions to divert the attention of its target audience while managing its short trades to benefit at the cost of investors,” the group said.
The Gautam Adani-led group also said that the report is selective and manipulative presentation of matters already in public domain to caste a false narrative. They also claimed that the Hindenburg report is rife with conflict of interest and intended only to create a false market in securities. Some 65 of the 88 questions posed by Hindenburg are based on Adani’s public disclosures and the conduct of the American short seller “is nothing short of a calculated securities fraud under applicable law,” Adani Group statement said. The group further reiterated that it will “exercise rights to pursue remedies to safeguard our stakeholders before all appropriate authorities.” The Adani Group’s response comes ahead of the final few days of a $2.5 billion share sale by Adani Enterprises, which received overall subscriptions of 1% on Friday. “Mala fide intention is apparent given its timing when Adani Enterprises is undertaking the largest equity FPO,” the group stated. Here is full response of Adani Group
Here’s the full report by Hindenburg Research
Hindenburg responds to Adani Group’s charges US short seller Hindenburg Research rejected Adani Group’s charge that its report was an attack on India, saying a “fraud” cannot be obfuscated by nationalism or a bloated response that ignored response to key allegations. Commenting on the 413-page response, Hindenburg said it believed India was a vibrant democracy and an emerging superpower with an exciting future and it was Adani Group which was holding it back through “systematic loot”.
Hindenburg stood by its last week’s report that said its two-year investigation found Adani Group “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”. Hindenburg said the response by the conglomerate run by Asia’s richest man Gautam Adani “opened with the sensationalistic claim that we are the ‘Madoffs of Manhattan’.” Hindenburg responded saying Adani Group “predictably tried to lead the focus away from substantive issues and instead stoked a nationalist narrative.” “Adani Group has attempted to conflate its meteoric rise and the wealth of its chairman, Gautam Adani, with the success of India itself,” it said. “We disagree. To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future. We also believe India’s future is being held back by Adani Group, which has draped itself in the Indian flag while systematically looting the nation.” Stating that a “fraud is fraud even when it’s perpetrated by one of the wealthiest individuals in the world,” it said Adani’s ‘413-page’ response only included about 30 pages focused on issues related to the report. Here’s Hindenburg’s full response on Adani Group’s charges
LIC reviews Adani response According to a report by Reuters, state-run Life Insurance Corporation (LIC), India’s largest insurer, is reviewing Adani Group’s response to scathing criticism by a US short-seller and will hold talks with the group’s management within days. “Presently there is a situation that’s emerging and we are not sure what is the factual position … Since we are a large investor, we have the right to ask relevant questions and we will definitely engage with them,” LIC managing director Raj Kumar told Reuters. LIC says it has invested Rs 36,470 crore ($4.47 billion) in Adani companies, about 1% of its assets under management. “Of course, we are studying the 413-page reply given by Adani Group,” Kumar said on Monday about the group’s response to concerns raised by Hindenburg.
“We will also see if the concerns are addressed. If we believe the concerns are not addressed, we will seek further clarification from them.” LIC owned a 4.23% stake in the flagship Adani Enterprises as of end-December, more than 9% in Adani Ports and Special Economic Zone, nearly 6% in Adani Total Gas and 3.65% in Adani Transmission, data from the Bombay Stock Exchange shows. Dollar bonds continue to fall Dollar bonds issued by entities of Adani Group continued to fall on Monday following a scathing report by a US short seller which triggered a rout in the conglomerate’s listed firms. US dollar-denominated bonds issued by Adani Ports and Special Economic Zone continued their fall into a second week with the bond maturing in August 2027 down 5 cents to 73.03 cents, the lowest since June 2020. International bonds issued by Adani Green Energy, Adani Economic Zone, Adani Transmission and Adani Electricity Mumbai also fell. (With inputs from agencies)
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WHEN mutual funds shy away from Adani Group companies, when their shares are tightly held, one investor finds it attractive: the government-owned Life Insurance Corporation of India.
In just eight quarters since September 2020, LIC has increased its shareholding sharply in four of the seven listed Adani Group companies, and in at least one of them almost six-fold.
Filings of the Adani Group companies to the stock exchanges reviewed by The Indian Express show that the total value of LIC’s holdings in these seven companies stood at Rs 74,142 crore as on date. This is 3.9 per cent of the Adani Group’s total market capitalisation of Rs 18.98 lakh crore.
Of its own equity portfolio, which is about Rs 9.3 lakh crore as on June 30, 2022, the value of LIC’s holdings in Adani Group companies at the closing price Thursday, accounts for 7.8 per cent.
How LIC shareholding in Adani Group companies increased between September 2020 and September 2022:
* From less than 1 per cent in flagship Adani Enterprises LIC’s stake rose to 4.02 per cent.
* In Adani Total Gas, it jumped to 5.77 per cent from less than 1 per cent.
* In Adani Transmission, LIC shareholding rose to 3.46 per cent from 2.42 per cent
* In Adani Green Energy, it has increased to 1.15 per cent from less than 1 per cent.
* The only exceptions are Adani Ports, where LIC holding is flat at 9.61 per cent, and two other firms Adani Power and Adani Wilmar, in which it is under 1 per cent.
Reflecting this increase in shareholding and stock prices, the worth of LIC’s shareholding and its value of LIC’s holding in the Adani Group companies has multiplied 10 times since September 2020: From just Rs 7,304 crore, or 1.24 per cent of the insurer’s equity AUM (assets under management), to Rs 74,142 crore, or 7.8 per cent now.
This stands out for the following reasons:
* In the insurance sector, LIC is the overwhelming No. 1 when it comes to investing in Adani Group companies. As on December 1, 2022, its Rs 74,142 crore is 98.9 per cent of the entire insurance industry’s investment in the group.
* LIC’s investment is more than five times the value of the holdings of all equity mutual funds in Adani Group companies. As of October 31, 2022, just Rs 15,701 crore, or barely 1 per cent, of equity funds’ total assets of Rs 15.22 lakh crore was invested in Adani Group companies – a level, in shareholding terms, that has held since September 2020.
* Over the last two years, as LIC bought shares in Adani Group companies, the group’s market capitalisation also rose – by almost seven times to Rs 18.98 lakh crore now from Rs 2.78 lakh crore on September 30, 2020. The benchmark Sensex increased 1.66 times to close at 63,284 points Thursday.
The Indian Express sent an email to the LIC spokesperson seeking response on the insurer’s significant purchases of Adani stocks. No response was received.
Incidentally, LIC holds 3.98 per cent of the aggregate market capitalisation of Tata Group companies (Rs 21.91 lakh crore), and mutual funds as a whole, hold 4.9 per cent.
Similarly, while LIC holds 6.45 per cent stake in RIL (market cap of Rs 18.42 lakh crore), mutual funds hold 5.68 per cent.
The Tata Group companies and the Adani Group are the top two in terms of market capitalisation followed by RIL.
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