Adani Group shares have plunged massively for the past two consecutive days falling up to 20% and losing over ₹4.17 lakh crore from the combined market valuation of listed firms after the US-based investment research firm Hindenburg Research accused the conglomerate and Asia’s richest man of “brazen” market manipulation and accounting fraud.
The 24 January Hindenburg’s report details a web of Adani-family-controlled offshore shell entities in tax havens, from the Caribbean, Mauritius, and the United Arab Emirates. It claims these were used to facilitate corruption, money laundering, and taxpayer theft while siphoning money from the group’s listed companies.
Naturally, the Adani Group has denied the claims by Hindemberg and said the report is “a malicious combination of selective misinformation and stale, baseless, and discredited allegations”.
Hindenburg said it had taken a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivative instruments.
The Adani Group is now considering taking legal action against Hindenburg Research. “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg,” Adani group’s legal head said in a statement.
On the other hand, market regulator Sebi has also increased scrutiny of deals by the Adani Group over the past year.
Meanwhile, a major concern has been raised regarding the exposure of LIC and SBI in Adani Group’s stocks.
Congress general secretary Jairam Ramesh said that the high exposure of financial institutions such as the Life Insurance Company of India (LIC) and the State Bank of India (SBI) to the Adani Group has implications for financial stability and for the crores of Indians whose savings are stewarded by these pillars of the financial system.
The Congress leader claimed that “As much as 8% of LIC’s equity assets under management, amounting to a gigantic sum of ₹74,000 crore, is in Adani companies and comprise its second-largest holding”.
Alleviating the concerns of lakhs of investors, SBI Chairman Dinesh Kumar Khara said, “There is nothing alarming about our Adani exposure and we don’t have any concerns as of now”.
He said that the Adani Group hadn’t raised any funding from SBI in the recent past and that the bank would take a “prudent call” on any funding request from them in the near future.
Another SBI official told Reuters news agency, “Our exposure to the Adani Group is below the large exposure framework of the Reserve Bank of India”.
The Union Bank of India was not seeing any stress from their exposure to the conglomerate either, an official at the bank said, also speaking on condition of anonymity as the matter was private.
According to Jefferies, the Adani Group’s debt accounts for 0.5% of total loans across the Indian banking sector. For public sector banks, the debt is at 0.7% of total loans and for private banks, it is at 0.3%.
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