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Nirmala Sitharaman assures investors, RBI says keeping vigil: Top developments in Adani-Hindenburg row

Nirmala Sitharaman assures investors, RBI says keeping vigil: Top developments in Adani-Hindenburg row



NEW DELHI: After 6 days of market rout, few of the Adani Group stocks rebounded on Friday after French energy company TotalEnergies’ positive sentiment on the firm.
However, the rebound wasn’t sufficient enough to compensate the massive losses it has suffered. Adani Group’s losses have now surmounted to nearly $120 billion.
Finance minister Nirmala Sitharaman’s statement on India’s strong banking system also exuded confidence among investors regarding their exposure to the Group. Later, RBI also reiterated Sitharaman’s statement and said India’s banking sector is resilient and stable.
Here are the top development in Adani-Hindenburg row:
Govt reviews Adani’s financials
  • The ministry of corporate affairs has started a preliminary review of Adani Group’s financial statements and other regulatory submissions made over the years, Reuters reported quoting sources.
  • The ministry’s review marks the latest scrutiny of the Adani Group, but a first by the government.
  • The process was initiated on Thursday, one of the government sources told Reuters, saying it was under “Section 206” of India’s Companies Act under which the government reviews financial documents submitted over the years, such as balance sheets, books of accounts or ledgers.

Nirmala Sitharaman on Adani-Hidenburg row

  • Finance minister Nirmala Sitharaman said she did not expect the ongoing controversy around Adani Group to affect investor confidence as India’s banking system is sound and the financial markets are “well regulated”.
  • Sitharaman said that the State Bank of India (SBI) and Life Insurance Corporation (LIC) of India have already explained that they are not overexposed to Adani Group stocks.
  • She also highlighted that India remains “an absolutely well governed” country and a “very well regulated financial market.” “One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed,” Sitharaman said.

Gautam Adani’s ranking falls further

  • Industrialist Gautam Adani slipped to 22nd position in Forbes Real-time Billionaires list during the day. However, at market close, his ranking improved a bit to 17th spot.
  • Adani has already lost his tag as the richest Indian person.
  • At present, Adani’s net worth stands at $61.7 billion.

Banking sector resilient, says RBI

  • Amid concerns over banks’ exposure to the crisis-ridden Adani Group, the Reserve Bank said India’s banking sector is resilient and stable, and the central bank maintains constant vigil on the lenders.
  • Responding to media reports expressing concern about the exposure of Indian banks to a “business conglomerate”, the Reserve Bank said in a statement that it is constantly monitoring the banking sector.

Finance secretary says no cause for concern

  • Finance secretary TV Somanathan said there was no cause for concern for depositors, policy holders or investors in any nationalised bank or insurance company due to their exposures in Adani group companies.
  • The exposure of the State Bank of India and the Life Insurance Corporation in any company is far below the level where it should be a concern for investors, Somanathan told a TV channel Friday.

SBI says 0.88% exposure to Adani Group

  • India’s largest lender State Bank of India (SBI) said total exposure to the Adani Group is 0.88% of the book or about Rs 27,000 crore.
  • SBI said it does not envisage any setback on its bets.
  • SBI has not extended any loans against shares to the ports-to-mining group, its chief said.
  • SBI Chairman Dinesh Khara clarified that the non-fund exposure is limited to letters of credit and performance bank guarantees, and is not related to any equity raising or acquisition activities of the Gautam Adani-led group.

Adani Enterprises dropped from Dow Jones

  • S&P Dow Jones said it will remove Adani Group’s flagship firm Adani Enterprises from sustainability indices with effect from February 7 following a media and stakeholder analysis triggered by allegations of accounting fraud.
  • The move comes amid leading stock exchanges BSE and NSE putting three Adani Group companies — Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements — under their short-term additional surveillance measure (ASM) framework.

Four Adani Group stocks rebound

  • Shares of four Adani Group firms, including Adani Enterprises and Adani Ports bounced back on Friday after facing heavy drubbing in the past 6 days.
  • The stock of Adani Enterprises rebounded 1.25% to settle at Rs 1,584.20 apiece on the BSE. During the day, it tumbled 35% to Rs 1,017.10 — its one-year low.
  • Shares of Adani Ports also bounced back and climbed 7.98% to Rs 498.85 after falling 14.51% to Rs 394.95 — its one-year low — during the day.
  • Some Adani Group stocks revived post the confident statement by TotalEnergies, a French energy company, raising the sentiment of the market

What Moody’s, Fitch said on Adani stock plunge

  • Credit ratings agency Moody’s warned that the recent sell-off in Adani group’s shares could reduce the conglomerate’s ability to raise capital.
  • While its peer Fitch saw no immediate impact on its ratings.
  • “These adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years,” Moody’s said.
  • Fitch added there were no significant offshore bonds maturing in the near term, reducing refinancing risks and near-term liquidity risks.

S&P revises outlook to negative

  • Ratings agency S&P Global revised outlook on Adani Ports and Adani Electricity to negative from stable while affirming the rating.
  • “There is a risk that investor concerns about the group’s governance and disclosures are larger than we have currently factored into our ratings, or that new investigations and negative market sentiment may lead to increased cost of capital and reduce funding access for rated entities,” S&P said in a statement.

(With inputs from agencies)





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SBI, LIC exposure within permitted limits; markets well regulated: Nirmala Sitharaman on Adani-Hindenburg row



NEW DELHI: Finance minister Nirmala Sitharaman on Friday said she did not expect the ongoing controversy around Adani Group to affect investor confidence as India’s banking system is sound and the financial markets are “well regulated”.
Shares of Adani Group companies have nosedived in the last 7 sessions, after an adverse report by Hindnenburg Reaearch which alleged accounting manipulations by the group.
The Group has now lost over $120 billion in last 7 trading sessions, erasing over 50% of its valuation.
Speaking to a news channel, Sitharaman said that the State Bank of India (SBI) and Life Insurance Corporation (LIC) of India have already explained that they are not overexposed to Adan Group stocks.
“They have very clearly said that their exposure (to Adani Group stocks) is very well within the permitted limits and with valuation falling as well, they are still over profit. That is the word from the horse’s mouth,” Sitharaman said.

She also highlighted that India remains “an absolutely well governed” country and a “very well regulated financial market.”
“One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed,” Sitharaman said.
Later, State Bank of India’s (SBI) chairman Dinesh Khara also said its overall exposure to the Adani Group is at 0.88% of the book or around Rs 27,000 crore and stressed that SBI has not given any loans against shares to the group.
Lending to Adani Group projects is with regard to ones having tangible assets and adequate cash flows, Khara said, adding that the group has an excellent repayment record.

He also said there has not been any refinance request, which has come from the Adani group.
Meanwhile, public sector lender Bank of Baroda has reduced exposure to the Group over the last 2 years, and has no concerns on asset quality issues with the conglomerate.
Earlier in the day, finance secretary TV Somanathan said there was no cause for concern for depositors, policy holders or investors in any nationalised bank or insurance company due to their exposures in Adani group companies.
Adani Group stocks have remained under pressure since January 24, after US short-seller Hindenburg Research published a report alleging stock manipulation by the Adani Group and raised concerns about high debt and valuations.
The report emphasised that key listed Adani companies have taken on substantial debt, including pledging shares of their inflated stocks for loans, putting the entire group on precarious financial footing.

In its response, Adani Group issued a statement on January 29 and likened the damning allegations to a “calculated attack” on India, its institutions and growth story.
Meanwhile, a report by rating agency Moody’s said the adverse developments around Adani were likely to reduce its ability to raise capital to “fund committed capex or refinance maturing debt” over the next one to two years.
However, it said a portion of Adani’s capital expenditure was deferrable, and its rated entities did not have significant maturing debt until fiscal year 2025.





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Adani Group’s loss swells to $65 billion; Hindenburg responds to charges



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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