The Adani Saga continues to unfold, 23rd January onward, when it got hit by a research report put out by Hindenburg Research. The report called Adani Group as ‘Pulling Off the Biggest Con in Corporate History’.
The Hindenburg report has laid bare the alleged internal manipulations done by the group to push up its share prices and then pledge those shares and borrow money from domestic and international lenders.
The immediate effect of this was that Adani Groups FPO worth 20,000 Crores failed to find retail participation and had to somehow be saved only to the withdrawn later.
The fact that Adani is close to India’s Prime Minister Narendra Modi, has been an open secret much before Modi came to the office of the PM. Adani group has got large concessions from Modi while he was the CM of Gujarat and that trend has not only continued by accelerated since 2014. So much so that Gautam Adani became the third richest man (based on his paper wealth, which Hindenburg alleges is manipulated) in the world.
But since the Hindenburg report, Adani Group has lost market valuation of 150 Billion US Dollars or close to 1,20,000 Crores, banks have termed their bonds to be junk, their credit ratings have turned negative and now the Adani group, to shore up its finances, has started to sell parts of companies that it owns at a discount to the market price of the share.
But the Government of India has stonewalled all requests of the opposition to investigate the Adani affair. Rahul Gandhi has asked six-seven pointed questions in the Lok Sabha, but they were all removed from the records. PM Modi in his response spoke on everything but Adani. It seems institutions that were supposed to be watchdogs, like SEBI, NSE, BSE, have failed to detect and stop the price manipulation in the Adani Group shares. Now they are in a free fall. And every fall requires the group to give margin money to the lenders that hold its pledged shares.
With the collapse of SVB (Silicon Valley Bank) in the US, the worlds banking industry is spooked, thus it will be difficult for Adani to borrow any more money internationally.
Yet, the government has taken an ostrich like approach and buried its head in the sand.
Perhaps the reason why Modi / Government does not want to speak on Adani saga is because it will completely expose the shenanigans that took place behind the curtain as Modi worked full time to get lucrative contracts for Adani from countries that he visited. But the damage has been done to Modi’s image. The government may refuse to speak but citizens have been able to read between the lines and understand how Modi, instead of promoting public sector undertakings, promoted Adani for projects across the world.
