Hindenburg Research Archives - Lokmarg

It’s High Time That The Adani Group is Investigated in India

By Sanjoy Narayan 3rd September 2023

Early this year Hindenburg Research, a New York financial firm, accused the Adani Group, India’s diversified industrial conglomerate (total revenues: $33 billion or Rs 2.625 lakh crore) of pulling off the biggest scam in corporate history by manipulating its own stock through offshore entities and, thereby, boosting the group’s value, which had reached a peak of $288 billion last year.

At that time, the Adani Group, which has interests in areas spanning sectors such as energy, resources, logistics, agriculture, defence and aerospace, had refuted the allegations calling them a calculated attack on India, and on the “the independence, integrity and quality of Indian institutions”. The group is headed by Gautam Adani, 61, who is also close to the Indian Prime Minister Narendra Modi. Their relationship dates back to when Modi was the chief minister of Gujarat, Adani’s home state, and Adani supported Modi’s political ambitions and economic vision. Since Modi became the prime minister, Adani’s net worth has increased by almost 250%, and some critics have accused him of benefiting from Modi’s policies and influence, and have raised concerns about the impact of their ties on India’s democracy and media freedom.

Following the Hindenburg accusations the Adani Group’s stock prices tumbled, eroding its valuation and dislodging Adani from a prime spot on the global richest list. However, there was no concerted investigation into the allegations that Hindenburg made.

Now, a fresh wave of controversy has hit Adani. New documents obtained by the Organised Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists with staff on six continents, for the first time have revealed details of the complex offshore operations based in Mauritius and apparently controlled by Adani’s associates and relatives. These operations were allegedly used to manipulate the share prices of the group’s companies between 2013 and 2018.

The new documents further establish that Gautam Adani’s brother, Vinod, has had links with the offshore entities that were used in the share manipulation operations. The investigations by the OCCRP have also found that the Indian stock market watchdog Securities & Exchange Board of India (SEBI) was handed evidence of the suspicious share trades as early as in 2014 but its efforts to follow up on it died down shortly after the Modi regime came to power in the same year.

Following the OCCRP revelations, many in India, including Opposition leaders, activists, and others, have demanded a probe into the group’s operations, particularly those linked to the alleged share manipulation. It is time now for SEBI, which is ostensibly an independent body, to conduct a full-scale investigation into the issue. Will that happen?

What China’s Slowdown Means for India

China’s $18-trillion economy is the second largest in the world, and its growth has been slowing down in recent months due to various factors, such as the Covid-19 pandemic, the power shortage, the real estate crisis, and the regulatory crackdown on some sectors. According to the latest data, China’s GDP growth this year is expected to be 4.6%, lower than the average of 9% that it has clocked annually since its economy opened up in 1978. Some analysts have warned that China’s economic troubles could have negative impacts on the global economy, especially on the commodity exporters, the trade partners, and the financial markets that are exposed to China.

One of the countries that could be affected by China’s slowdown is India, which has a complex and competitive relationship with its northern neighbour. India’s bilateral trade with China has grown nearly 50% over the past two years. China is India’s largest trading partner and a major source of imports for various sectors, such as electronics, pharmaceuticals, chemicals, and machinery. A slowdown in China could reduce the demand for some of India’s exports, such as iron ore, cotton, and seafood. It could also disrupt the supply chains and increase the costs of some inputs for India’s industries.

On the flipside, though, China’s slowdown could also present some opportunities for India to attract more foreign investment, diversify its trade relations, and enhance its competitiveness in some sectors.

For example, India could benefit from the global shift of manufacturing away from China due to rising costs and geopolitical risks. India could also leverage its domestic market, its demographic dividend, its digital innovation, and its strategic partnerships to boost its economic growth and resilience.

What is more, India could use the window of opportunity to resolve some of its structural challenges, such as improving its infrastructure, reforming its labour laws, enhancing its ease of doing business, and strengthening its financial sector.

What is Chandrayaan-3 Doing After it Landed on the Moon?

After Chandrayaan-3’s lander, named Vikram, touched down on the lunar soil near the south pole of the moon, it is its rover, named Pragyaan, which has swung into action, taking its first steps on the moon.

The Indian Space Research Organisation (ISRO) has been periodically updating the world on what the rover has been up to and its findings. Here are some of the highlights:

First, it has found many chemicals in the lunar soil. These include, notably sulphur and oxygen. Other chemicals that have been found include aluminium, calcium, iron, chromium, titanium, manganese, silicon and oxygen.

The Vikram rover has also negotiated several craters, including ones that measure a diameter of over four metres on the surface of the moon. These give an idea of the lay of the land on the moon.

The other major finding by Vikram’s roving on the surface is an insight into the temperatures on the moon. According to preliminary data, the temperatures vary widely. While the temperature on the surface of the moon was expected to be in the range of 20-30 Celsius, Vikram has found temperatures on the surface to be 60 C or higher, while temperatures just three inches below the surface apparently drop to -10 C.

This confirms the earlier findings that the temperature ranges on the moon are extreme and some crates that lie permanently in the shadows of the south pole are extremely cold. One of the main objectives of Chandrayaan-3, besides getting an idea of the elements that are found on the moon, is to find whether there is also water there.

After the Moon, it’s the Sun…

On Saturday September 2, Aditya-L1, India’s first dedicated space mission to study the sun, was launched by ISRO from the Satish Dhawan Space Centre at Sriharikota in Andhra Pradesh. The mission consists of a satellite that carries seven scientific instruments to observe various aspects of the sun, such as its corona, photosphere, chromosphere, and solar wind. The satellite is placed in a halo orbit around the L1 point, which is a gravitationally stable spot about 1.5 million kilometres from Earth in the direction of the sun. The mission is expected to provide valuable data and insights into the solar activities and their effects on space weather and climate.

India’s solar mission has two aspects: one is a national policy to promote solar power, and the other is a space mission to study the sun.

The National Solar Mission is an initiative of the Indian government to promote solar power. The mission is one of the several policies of the National Action Plan on Climate Change and it aims to achieve 100 GW of solar power capacity by 2022, and to reduce the cost of solar power generation in India. The mission also supports various schemes and programs, such as rooftop solar, grid-connected solar, off-grid solar, and solar parks.

The Controversy at Ashoka University

The recent controversy involving Ashoka University, a leading private university, began when one of its faculty members, Sabyasachi Das, resigned after facing backlash for his research paper that suggested possible vote manipulation by the ruling Bharatiya Janata Party (BJP) in the 2019 general elections. The paper, titled Democratic Backsliding in the World’s Largest Democracy, presents evidence that indicates voter suppression to favour the BJP, especially against the Muslim minority group.

The university has since distanced itself from the paper, saying it has “not yet completed a critical review process” and instituted an inquiry committee to examine its academic merits. Das resigned from his post, saying he felt “uncomfortable” and “unwelcome” at the university. His resignation sparked protests by students and teachers at Ashoka, who accused the university of stifling academic freedom and bowing to political pressure

This is not the first time that Ashoka University faced criticism for compromising its academic independence. In March 2021, two prominent professors, Pratap Bhanu Mehta and Arvind Subramanian, also resigned from the university, citing concerns over the lack of freedom and autonomy. Mehta, a political scientist and public intellectual, had been vocal in his criticism of the Modi government and its policies. He wrote in his resignation letter that his association with the university was a “political liability” for its founders and donors.

Subramanian, a former chief economic advisor to the government, resigned in solidarity with Mehta, calling his exit “ominously disturbing” for academic freedom.

These incidents have raised questions about the role and responsibility of private universities in India, especially in the context of increasing state interference and intolerance towards dissenting voices in academia.

Some critics have argued that private universities are more vulnerable to political and financial pressures than public ones, and that they lack transparency and accountability in their governance and decision-making processes. Others have defended Ashoka University as an example of excellence and innovation in higher education, and have urged its founders and authorities to uphold its vision and values of liberal arts and sciences.

Ashoka University, located in Sonipat, Haryana, India, focuses on liberal education in humanities, social sciences, and natural sciences. It was set up in 2014 by a group of philanthropists and entrepreneurs who wanted to create a world-class institution for higher learning.

SEBI Never Comments On Entity-Specific Matters: Chief On Adani-Hindenburg

By LokMarg 29th March 2023

Securities and Exchange Board of India chairperson Madhabi Puri Buch, in her first press appearance since the Adani-Hindenburg issue rocked the country, categorically said the regulator will not comment on it as the matter is sub-judice.

On March 2, the Supreme Court set up an expert committee amid the controversy arising out of a report by US short-seller Hindenburg Research on the Adani Group. It directed SEBI to investigate whether there has been a violation of Section 19 of SEBI rules and any manipulation of stock prices.
“We never comment on entity-specific matters and on top of that, the matter is before the Supreme Court. We never comment on sub-judice matters,” Buch said at a press conference after its board meeting.

“We will follow the advice of the Supreme Court. We are duty-bound to follow whatever the Supreme Court has said,” she said, adding, “We will follow the Supreme Court order in letter and spirit.”

Further, she informed that the apex court has instructed the regulator to precisely give the update to the committee and it will be inappropriate to comment on the matter.

The January 24 Hindenburg report alleged stock manipulation and accounting fraud by the conglomerate. Over the past few weeks since the Hindenburg report, share prices of most companies in the Adani Group have dropped significantly, though in varying degrees.

In response to the US short seller’s report, the Adani Group had hit back, calling Hindenburg Research “an unethical short seller” and stating that the report was “nothing but a lie”. The continued sell-offs in the group’s stocks led its flagship firm, Adani Enterprises Limited, to cancel a fully subscribed Rs 20,000 crore follow-on public offer.

Adani Group on January 29, in a long 413-page report, said the report by Hindenburg Research was not an attack on any specific company but a “calculated attack” on India and its growth story. (ANI)

Whichever Way His Appeal Goes, Rahul Gandhi Must Apologise

By Sanjoy Narayan 26th March 2023

Whether he wins an appeal or not, Rahul must apologise

Four years ago, on the campaign trail before the 2019 Lok Sabha elections, Rahul Gandhi, Congress leader and scion of the party’s first family, is believed to have stated: “Why do all the thieves, be it Nirav Modi, Lalit Modi, or Narendra Modi, have ‘Modi’ in their names?” Now,that alleged utterance earned him a jail sentence, a fine, and more. Last week, a court in the Gujarat city of Surat sentenced Gandhi to two years imprisonment and a fine of ₹15,000 for defamation against Prime Minister Narendra Modi. A day after the court verdict, Gandhi, an elected MP from Wayanad in Kerala, was suspended from Parliament and disqualified from the House.

To be sure, Gandhi was given bail for 30 days to appeal against the court’s verdict but if that fails and the suspension stands, Gandhi could face disqualification from the House for six years. For a heated, spur-of-the-moment outburst during campaigning, the price he might have to pay could be high. Legal experts of various hues have weighed in on the court’s verdict, debating whether Gandhi’s alleged statement, referring to the surname, lowers the reputation of everyone who has that surname and, specifically, that of India’s Prime Minister. Incidentally, the court’s verdict came after it heard a complaint filed by a BJP MLA from Gujarat named Purnesh Modi who accused Gandhi of defaming 130 million people living in India having the surname ‘Modi’.

We will have to wait to see how Gandhi’s appeal in the case pans out. The bigger issue, however, is whether he has been needlessly reckless with his comments. It is true that electioneering in India is commonly marked by politicians trading charges, sometimes even baseless ones, targeting rivals. It is not uncommon in the high-decibel circus that accompanies campaigning in India to hear politicians hurl abuse and potentially defamatory allegations against each other.

That is, like it or not, the nature of campaigning in a country where the number of people eligible to vote in 2019 was more than 912 million (the population of the European Union is around 447 million; the population of the US is 332 million; and that of Russia is 144 million). Laws are routinely tested during electioneering: enticements with money or other material benefits to induce people to vote for a particular candidate are common; and, in addition, politicians often resort to threats, coercion, and violence to get votes.

Then there are the campaign speeches in which, often, political leaders push the boundaries of decency and etiquette when they allude to their rivals. Slander, abuse, and baseless allegations are not rare when it comes to speeches and statements that politicians make on the campaign trail. If, however, Rahul Gandhi did say what he has been accused of, did he cross the line?

Gandhi has a history of making public statements that are often embarrassing gaffes. In 2015, at an election rally in rural Bihar, one of India’s poorest states, Gandhi who was then vice-president of his party said: “Look around and see; people here are not wearing suit-boot but torn clothes and kurtas.” The statement was intended to be a jibe at the Modi government for what he thought was a bias towards big business and richer Indians but to an audience of poor and underprivileged villagers, it was highly insensitive.

In 2013, while talking at an Indian industry forum for the first time, he made the bewildering statement that India was a “beehive” and not an “elephant” to China’s “dragon”. On another occasion, he profoundly said that “politics is in your shirt, in your pants; it’s everywhere”. And, at a Congress party convention in 2013, he made the assertion that India’s Dalit community needed “Jupiter’s escape velocity”.

More recently, he went on tour to the UK and in speeches and public interactions, criticized the Indian foreign minister’s comments about China as being “cowardly”, accused the government of stifling democracy, and was quoted as saying that the Indian government was intolerant of criticism and accused it of trying to silence the Opposition. This was interpreted by his opponents as being undiplomatic and “anti-Indian”.

Many of his senior colleagues in Congress, a party where nearly everybody pays obeisance that borders on servility to the Gandhi family, defend Rahul Gandhi, by saying that he is young and still developing as a politician. For someone who will turn 53 this year, he surely is taking a lot of time to do that.

His 2019 comments referring to the Modi surname were unwarranted and egregious and, obviously, targeted at the Prime Minister. The issue is that Gandhi had no basis for his insinuation and, while legal experts will debate and differ on the interpretation of what he said, and no matter what the courts finally decide, at the least, he owes an apology to all Modis, including, of course, the Prime Minister. That would be a decent thing to do.

Pro-Khalistan Preacher on the Run

For several days now, there has been an all-India manhunt for Amritpal Singh, a pro-Khalistani Sikh leader from Punjab who supports the creation of a separate state for Sikhs. Singh, 30, who has a sizable following, has been on the run since March 18 and although thousands of police and security forces have been mobilized, he still remains at large.

Amritpal Singh is the leader of a group known as Waris De Punjab (translated, it means the ‘heirs of Punjab’). Last month, his supporters, armed with guns and swords, attacked a police station to seek the release of a member of the group. Although the police arrested hundreds of supporters connected to the attack, Singh remains free and untraceable.

Singh rose to the forefront during the farmers’ protests in 2020 against the Indian government’s new farm laws. Singh joined the protests by aligning with the Waris De Punjab group that was founded by Deep Sandhu, an activist and actor. After Sandhu died in a car accident, Singh took over at the helm of the group and his speeches directed against the “Hindu nationalist” government and other Punjab-related issues garnered substantial support in the state.

Many compare Singh to Jarnail Singh Bhindranwale, a separatist leader who was killed in 1984, when under the then Prime Minister Indira Gandhi, the Indian army stormed the Golden Temple, the holiest shrine of the Sikhs. That incident led to anger and strong resentment in the Sikh community and resulted in further communal tensions. Indira Gandhi was killed by her Sikh bodyguards and a horrendous period of riots engulfed the country.

Amritpal Singh may not have attained the stature that Bhindranwale had but he has been making provocative statements against many, including the Union home minister, Amit Shah.

In Punjab where the ruling government is led by the Aam Aadmi Party, there has been a crackdown on communication, including the internet and social media. Meanwhile, there have been international protests against the action of the government against Singh and his followers, including anti-India protests in Australia, Canada, the UK, and the US.

What to Make of Xi Jinping’s Visit to Russia?

Speculation over what the all-powerful Chinese president Xi Jinping’s visit to Russia and his meeting with the Russian president Vladimir Putin would achieve swirled in the western media last week. It was Xi’s first visit to Russia after the latter attacked Ukraine more than a year back. While China proclaimed that Xi’s was a peace brokering trip, it didn’t really turn out that way. Instead, it appeared that the visit cemented further the ties between the two countries. China has been defending Russia diplomatically for a long time and has supported the latter’s views on the sanctions that the west has imposed on Russia. With the sanctions that it faces, Russia needs China as a trading partner. China buys oil from Russia and the latter imports manufactured goods as well as crucial weapons from China.

Good ties with Russia also fit in well with China’s overall Belt and Road Initiative, one of Xi’s most ambitious plans of strengthening Beijing’s leadership through a programme of infrastructure building throughout China’s neighbouring regions.

In fact, Russia can count on China as being its biggest ally in a scenario where it has become increasingly isolated from much of the world. Observers feel the body language of the two leaders amply demonstrated that China was the more powerful “Big Brother” that Russia could count on.

The meetings between Xi and Putin did not lead to any meaningful breakthrough in the conflict with Ukraine although China had positioned itself as a peace broker. According to a joint statement released by China, both Xi and Putin said they wanted a stop to the actions that led to “increased tensions” and prolonged the war in Ukraine, but the statement did not acknowledge that Russia’s invasion and military assault were the cause of the growing and continuing crisis in Ukraine.

The two leaders also called on NATO to respect the sovereignty, security, and interests of other countries, which reflected the rhetoric that it was the western security alliance’s fault that had provoked the Russian attack on Ukraine. In short, the stalemate continues. Western analysts view Xi’s visit and its impact as the rising superpower’s continuing threat to the west.

Tech Sector Layoffs Continue…

Is the tech balloon losing steam? Since late last year, many tech giants have been revising their revenue targets downwards and slashing their workforce. The trend is continuing.

Last weekend, Amazon, the biggest e-tailer, began slashing jobs as part of its latest move to downsize by 9,000 employees. The biggest cuts are in Amazon’s web services, advertising, human resources, and its streaming site, Twitch. In January the company had announced cutting 19,000 jobs.

Amazon’s decision comes soon after Meta, the parent company of Facebook, Instagram, and Whatsapp, announced in mid-March that it wants to cut 10,000 jobs, which follows last November’s sacking of 11,000 employees at the company.

Tech sector downsizing is now a trend. Last Thursday, Accenture, the Irish-American IT services and consulting giant, announced that it would cut 19,000 jobs.

Once a lucrative destination for job-seekers, the tech sector seems like it is caught in a meltdown.

Hindenburg Strikes Again

After targeting India’s Adani group, now the short-seller activist, Hindenburg Research, has taken aim at Twitter’s co-founder Jack Dorsey’s company, Block.

The stocks of Block, a payment company founded by Dorsey, crashed after a Hindenburg report announced that the company had allowed criminal activity to operate with lax controls and “highly” inflated Block’s Cash App’s transacting user base, a key metric of performance.

Hindenburg alleged that Cash App’s user base had large numbers of unbanked entities. Block’s shares plunged nearly 20% shortly after Hindenburg’s claims.

Financial circles are apprehensive about the activist research firm and whether it will make further investigative revelations that could impact the value of other companies.

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Adani Group Founder and Chairman Gautam Adani Dharavi Project

Will Adani Survive Hindenburg Setback?

By Kunal Bose 1st March 2023

People buy life insurance policies on the basis of trust that insurance companies would make investment of premium money based on knowledge and prudence to secure the future of insured and make every attempt to give them good returns on investment. The business is expected to be conducted on the “principle of utmost good faith.” The country’s largest life insurer Life Insurance Corporation, in which the government owns 96.5 per cent after it sold 3.5 per cent ownership through initial public offering at a price of Rs949 a share of Rs10 face value, is found to have painted itself into a corner over its bewilderingly large investment in Adani Group companies, more by way of share purchases than sanction of debts.

Since the publication of Hindenburg report on January 24 levelling accusations of “brazen stock manipulation and an accounting fraud scheme over the course of decades,” shares of all Adani Group listed companies have come in for free fall. LIC shares too have suffered a collateral damage with the price hitting 52-week low. This cannot be otherwise because LIC has humongous investments in the beleaguered group.

Between the revelations by the US short-seller Hindenburg, claimed to be based on a two-year investigation, the Adani group’s market capitalisation has shrunk by Rs12.06 lakh crore, or 63 per cent. If one goes by Hindenburg report, which is strongly denounced by Adanis as anti-Indian, the share rout is not complete yet. (But should a private group invoke nationalism as defence when it comes under a cloud?) The report ominously says: “Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85 per cent downside purely on a fundamental basis owing to sky-high valuations.” At the time of Hindenburg report release, the Group, which saw meteoric price rises on the stock market, had a market capitalisation of Rs19.12 lakh crore. This, however, was down from the high of Rs22.93 lakh crore on September 20, 2022. Almost like a seer’s prediction, some of the seven Adani stocks have lost value teasingly close to 85 per cent, as Hindenburg report anticipated.

Take Adani Enterprises, the Group’s holding company. Stung by collapse of share prices, it was compelled to call off the follow on public offer (FOPO) set at between Rs3,112 and Rs3,276 (full subscription had to be ensured by way of pulling strings with investors in the Gulf and some friendly groups here) and return money to subscribers. What could Gautam Adani have done but return the money his flagship enterprise secured in the course of FOPO with open market price seeking lower and lower price at every trading session. As a result of the stock market rout, Gautam who rapidly rose to become the world’s third richest man with a net worth of $116 billion (Bloomberg Billionaires Index as on December 28, 2022) and India’s and also Asia’s richest. But with his net worth experiencing a free fall every trading day caught in a short selling blizzard, Gautam , according to Forbes, now with wealth of $33.4 billion is 38 in global ranking of the richest.

But whatever the popular perception of Gautam following the Hindenburg accusations, to be fair to the man, he is never boastful of his and his family’s wealth. In an interview following his ascendance to the world’s third richest slot with India Today Group, he said: “These rankings and numbers do not matter to me. They are only media hype. I am a first generation entrepreneur who had to build everything from scratch. I get my thrill from handling challenges. The bigger they are, the happier I am.” He claims to find joy in meeting challenges and finding solutions. If that be so, proving Hindenburg wrong that his “amassing a net worth of roughly $120 million in the past three years largely through “brazen stock manipulation and accounting fraud” is the challenge he surely never thought would come his way. The degree of his brazenness is shown in spikes of shares of Adani Group’s “seven listed companies” by an “average of 819 per cent… in the past three years.”

Such unimaginable building of wealth in a short period, indefensible support of government institutions such as LIC and State Bank and ease in acquiring expensive assets like the Indian cement business of Holcim, according to many observers, would not have been possible without the blessings of the powers that be. There has not been a singular intervention by regulators such as Securities and Exchange of Board of India (SEBI) and Reserve Bank of India (RBI) to rein in the Group or talk of any inquiry when the Group fortunes were ascending at stratospheric rates. Going by the Hindenburg report, the Group’s meteoric rise was aided in no small way by: (i) Adani companies piling up substantial debts by pledging shares whose prices were inflated through market manipulation. As a result, “five of the seven listed companies are indicating near-term liquidity pressure.” (ii) Its research has allegedly established that Gautam’s elder brother Vinod or his close associates “manage a vast labyrinth of offshore shell companies.” The US short-seller claims to have found 38 Mauritius shell companies and also similar such entities in Cyprus, the UAE, Singapore and several Caribbean Islands under Vinod’s charge.

Financial and reputational scars that the report left on Adani Group and the family led them to dismiss it as “maliciously mischievous.” They don’t think it is based on “research” at all. The group legal head Jatin Jalundhwala said: “The unsubstantiated contents are designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg, by their own admission, is positioned to benefit from a slide in Adani shares.” Such expected blasters apart, the Adanis are in the process of evaluating provisions of Indian and US laws for “remedial and punitive action against Hindenburg.” Hindenburg, it will appear, will welcome a legal battle in a court in the US “where we operate. We have a long list of documents we would demand in a legal discovery process.”

ALSO READ: The Adani Ascendency Phenomenon

One will not be surprised if instead of going to the court, the Adani Group will stay focussed in servicing debts, make payment for loans as they mature, run businesses from mining to ports to power efficiently removing opaqueness that invites criticism. Hindenburg report makes the allegation that “the Group’s very top ranks and eight of 22 key leaders are Adani family members, a dynamic that places control of the Group’s financials and key decisions in the hands of a few. A former executive described the Adani Group as a family business.” There is nothing wrong in competent family members holding important offices in businesses. But the important requirement is they at all cost avoid doing the kind of shenanigans mentioned in Hindenburg report.

It will be a long time before the bewildering Adani drama gets unfolded. This is despite finance minister Nirmala Sitharaman saying “our regulators are very stringent about governance practices and have kept our markets in prime condition.” In an attempt to reassure the public she also said the exposure of LIC and SBI to Adani Group was “within permissible limit.” Her statement ten days after the publication of the Hindenburg report was intended to restore confidence among investors. To her mortification, however, along with the continued Adani rout, the broad market too is experiencing value erosion almost on a daily basis. Intriguingly while mutual funds in general have stayed clear of Adani shares, LIC is found generous with public money to invest heavily in Adani shares. The government owned life insurer owns between 1.28 per cent and 9.14 per cent of issued capital of seven listed Adani companies. People have the right to know on what consideration LIC investment experts opened the purse, which they hold in trust of millions of insured, to acquire Adani shares.

The alleged omissions of Adani Group have provided a handle to the Opposition, particularly the Congress and its uncrowned leader Rahul Gandhi with the stick to berate the government, both within and outside Parliament. Gandhi vitriol is mainly targeted at prime minister Narendra Modi. The Gandhi proposition is the stunning wealth build up of Gautam Adani through his string of companies in such a short period is because of his proximity to Modi and government investigative agencies not bothering him. To Gandhi’s mortification, however, the Lok Sabha speaker Om Birla expunged much of what he said in the Lok Sabha on the subject as he rejected the Opposition demand for investigation on Adani Group by a joint parliamentary committee (JPC).

The immediate fallout of Hindenburg report and the stock market rout of Adani shares that followed is the Group decision to tread carefully with expansion. The decision not to bid for government ownership of Power Trading Corporation has already been made. Will the Group still be a contender for PSU (public sector undertaking) NMDC Steel, which the government has decided to exit? Hasn’t the Adani plan to build a 4 million tonne alumina refinery as well as an iron ore project involving an investment close to Rs60,000 crore in Odisha announced in August 2022 with much fanfare too become uncertain? Unlike Congress, Trinamool Congress has been circumspect in criticising the Adani Group, which last year announced the plan to construct a deep sea port at Tajpur in East Midnapur of West Bengal. Speculation is rife if investment starved Bengal will get to see work on port construction starting anytime soon.

When Gautam Adani remains the target of vitriolic attack from so many quarters, the country’s senior most economics editor Swaminathan S Anklesaria Aiyar has made some interesting contrarian observations in an article in The Economic Times. He writes: “Adani critics say he shot to riches not through skills but manipulation and minting money in cosy monopolies. I disagree. Going from humble origins to global No. 3 in two decades is impossible without exceptional business skills.” Aiyar thought it would be appropriate to make a mention of Dhirubhai Ambani to drive home the point that Adani is not guilty of playing tricks that the country didn’t experience before. It goes like this: “Once, Dhirubhai Ambani was also accused of political manipulation and boondoggles. He responded, ‘What have I done that every other businessman has not?’… Other businessmen, many with formidable historical advantages, had also wooed politicians and fiddled books, For a newcomer like Dhirubhai to beat the old giants at their own game signified immense talent. Something similar can be said of Adani.”

Finally, Aiyar says, “The Hindenburg report may be the best thing that ever happened to Adani. It will slow his speed of expansion… and force his financiers to be diligent and cautious in future. This could impose highly desirable financial discipline on Adani, to his own benefit.” He concludes by saying: “One day I might actually buy Adani shares.” Aiyar thereby is confirming that Adani has the acuity to overcome his current problems and steady the Group. Aiyar is not alone to have come out with support for Gautam. KP Singh, chairman of DLF, says: “Good side I find with Adani is all his companies are operation-wise profitable… Adani will come back again. It is not end of story.” Aiyar has a few others from business and industry keeping him company.

Interest Of Investors Paramount: Adani After Calling Off FPO

By LokMarg 2nd February 2023

A day after deciding not to go ahead with the fully subscribed Follow-on Public Offer (FPO), Adani Enterprises Ltd chairman Gautam Adani on Thursday said it would not be “morally correct” to go ahead with the Rs 20,000-crore share in the current market condition.

“After a fully subscribed FPO, yesterday’s decision of its withdrawal would have surprised many. But considering the volatility of the market seen yesterday, the board strongly felt that it would not be morally correct to proceed with the FPO,” Adani said in his address to investors after the withdrawal of the fully subscribed FPO.
https://www.youtube.com/embed/HqOnz7iVNno

Adani said in his humble journey of over four decades as an entrepreneur, “I have been blessed to receive overwhelming support from all stakeholders, particularly the investor community. It is important for me to confess that whatever little I have achieved in life is due to the faith and trust reposed by them. I owe all my success to them.”

“For me, the interest of my investors is paramount and everything is secondary. Hence to insulate the investors from potential losses we have withdrawn the FPO,” he said.

This decision, he said “will not have any impact on our existing operations and future plans. We will continue to focus on timely execution and delivery of projects.”

“The fundamentals of our company are strong. Our balance sheet is healthy and assets, robust. Our EBIDTA levels and cash flows have been very strong and we have an impeccable track record of fulfilling our debt obligations. We will continue to focus on long term value creation and growth will be managed by internal accruals,” Adani said.

“Once the market stabilizes, we will review our capital market strategy,” he said.

“We have a strong focus on ESG and every business of ours will continue to create value in a responsible way. The strongest validation of our governance principles, comes from several international partnerships we have built across our different entities,” Adani said.

“I take this opportunity to thank our investment bankers, institutional investors and shareholders from within and outside the country for giving unflinching support to the FPO.”

Thanking investors, he said, “Despite the volatility in the stock over the last week your faith and belief in the company, its business and its management has been extremely reassuring and humbling.”

Shares of Adani Enterprises nosedived sharply on Wednesday, a day after its follow-on public offer closed for the subscription. The shares of Adani Group flagship company closed at Rs 2,179.75 with a sharp decline of 26.70 per cent. Its intraday low was Rs 1,941.2, over 30 per cent lower than Tuesday’s settlement price. On Tuesday, the last day for subscription, the follow-on public offer (FPO) issued by Adani Enterprises was fully subscribed.

A follow-on public offering (FPO) is the issuance of shares to investors by a company listed on a stock exchange after its initial public offerings.

Data showed the demand for the FPO was led by non-institutional investors, and they subscribed to the shares 3.26 times. The portion for institutional investors was also oversubscribed.

On Monday, an Abu Dhabi-based diversified conglomerate International Holding Company announced that it will invest about USD 400 million (AED 1.4 billion) into the Adani Enterprises’ follow-on public offer (FPO) through its subsidiary Green Transmission Investment Holding RSC Limited.

Adani Enterprises had filed a red herring prospectus with the markets regulator Securities and Exchange Board of India (SEBI) for the Rs 20,000 crore follow-on public offer (FPO), the largest ever in India. There were concerns that the FPO may not receive a strong response from investors amid a report by a US-based Hindenburg Research that surfaced on January 24, which claimed the Adani Group of having weak business fundamentals among others.

The US-based firm, in its report, raised concerns about shares of Adani group companies having a possibility of declining from their current levels, owing to high valuations. In response, Adani Group on Sunday said the recent report by Hindenburg Research was not an attack on any specific company but a “calculated attack” on India, its growth story, and ambitions. It added the report was “nothing but a lie”. (ANI)

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Five Things That Happened Last Week (And What to Make of Them)

By Sanjoy Narayan 29th January 2023

Why banning media doesn’t usually work

Early last week, BBC aired the second part of the documentary, India: The Modi Question, in Britain. The Indian government has banned the series and social media and streaming platforms have complied with the government’s order. Yet, many have resorted to other means of downloading the series and distributing it for viewing.

While the first episode focused mainly on the 2002 riots in Gujarat and its aftermath, the second and final episode looks mainly at the “religious turmoil” that has ensued in the years after the Modi regime began. The report is comprehensive and also includes views of the police, the government and other authorities. It focuses on the eruption of lynchings related to cow slaughter and on the controversial Citizenship (Amendment) Act, 2019.

As expected, the documentary and the government action that has followed have led to political ripples. In Kerala, the Congress has screened the documentary in Thiruvananthapuram and although the Congress is in the Opposition in that state, the ruling CPM government has opposed the central government’s ban on the documentary.

It is a common trend that banning exercises such as this one is usually futile. In fact, often a ban on books, movies or other media can lead to heightened interest among the public and that has happened in the case of the BBC film as well. People have been sharing foreign site links where the documentary can be watched; and others have used virtual private networks (VPNs) to bypass the geographic ban. The Congress leader Rahul Gandhi commented: “Truth shines bright. It has a nasty habit of coming out. So no amount of banning, oppression and frightening people is going to stop the truth from coming out.”

To be sure, the documentary makes no big or unforeseen revelations. Much of what has been depicted–whether it is related to the riots or to the references about how Muslims in India have been feeling insecure in the past few years–is already in the public domain. In that context, the government’s decision to ban it could seem hasty and not well thought through. Instead of a ban, an official statement condemning it or rebutting the points that irk the Modi regime could have sufficed. Such a response could also be better for the image of the government, depicting it as a supporter of free speech rather than an authoritarian regime that does not tolerate any form of criticism.

Adani group in the centre of a controversy

An American short-seller activist fund and investment research group has accused the Adani Group (revenues in 2022: $23.3 billion), a conglomerate that is headed by Gautam Adani with interests in infrastructure of what it has called the “biggest con in corporate history”. Hindenburg Research’s report on the group has already wiped out billions of dollars in market capitalisation of the listed stocks of the group. Adani is the world’s third richest man and Asia’s richest. He is also believed to be close to Prime Minister Narendra Modi.

The Hindenburg report accuses the group of widespread manipulation of stocks through undisclosed transactions by using entities in offshore tax havens such as Mauritius and the Caribbean islands. These transactions are believed to have hidden the substantial debt that the group has making it financially “precarious”, according to Hindenburg Research.

Adani Group has refuted the allegations and says that it intends to sue the research firm, which is an investment research firm with a focus on activist short-selling, founded by Nathan Anderson. Adani group says the report is malicious and was intended to sabotage the group’s follow-up public offer. But although banks were worried about the $2.5 billion share sale following the crash in the group’s share values, the group itself said the issue remains on schedule.

Manipulation of stocks via offshore entities that are indirectly linked to promoters is not uncommon in India. There have been many instances by big industrial houses that have resorted to the practice, which is inherently illegal. The charges against the Adani group are likely to be contested in court but the fact remains that the group, whose meteoric rise has been impressive, will be impacted by the taint on its reputation.

Many firsts for India on Republic Day

India celebrated its 74th Republic Day with the customary parade in New Delhi. This year’s chief guest was Egyptian President Abdel Fattah El-Sisi. But there were many new highlights of the celebration this year.

It was the first time that the renamed and revamped Kartavya Path (previously known as Raj Path) was the venue of the celebrations, which were flagged off by President Droupadi Murmu. One of the highlights of this year’s parade was an all-woman marching contingent of the Central Reserve Police, and the representation of several women in many of the other contingents. The Navy contingent, for instance, was led by a woman officer.

Also, in the spirit of self-reliance, the emphasis was on showcasing Indian-made defence equipment such as Arjun tanks and the Akash missile system. The Prime Minister, in a message to the people, said: “I wish that we move forward unitedly to fulfill the dreams of the country’s great freedom fighters. Happy Republic Day to all fellow Indians!”

In all, there were 23 tableaux, representing states, union territories, and government institutions, which depicted Indian culture, heritage, and progress. India’s Republic Day celebration is a grand annual event that aims to demonstrate the country’s development, tradition, and, of course, military prowess. This year, it also celebrated the ascension of women in the armed forces and related organisations.

Opium production in Myanmar is on a high

As it had happened in Afghanistan, with Myanmar’s economy under severe pressure, after the military rule began in the country in 2021, opium production has soared. According to reports by a United Nations’ body, there was a 33% increase in poppy cultivation in Myanmar and an 88% increase in potential opium yield. Opium is used to make heroin, the highly addictive drug, and a surge in its output near the eastern borders of India should be cause for concern.

BBC quoted Jeremy Douglas, the regional representative of the UN Office on Drugs and Crime (UNODC) as saying: “Economic, security and governance disruptions that followed the military takeover of February 2021 have converged, and farmers in remote, often conflict-prone areas in northern Shan and border states, have had little option but to move back to opium.”

What does this mean for India? India shares a 1,643-km long border with Myanmar that passes through four States: Arunachal Pradesh, Nagaland, Manipur and Mizoram. Opium or its highly addictive derivative heroin could find its way across the borders to India and become a conduit to the global market for the drug.

This should raise an alarm for Indian authorities to pre-empt and tighten controls against drug smuggling into the country.

Pathaan, the movie, breaks records

In December, Pathaan, a Bollywood movie starring Shah Rukh Khan and Deepika Padukone was embroiled in a controversy over a song, Besharam Rang. The visuals accompanying the song showed Padukone in a bikini coloured orange (which is close to saffron). According to Hindu mythology, saffron is the colour of sunset and fire, which represent sacrifice, light, and quest of salvation. The colour is usually used (as in robes for sadhus and in flags) to symbolise devotion to the religion.

The film and the song (whose title can be translated as “shameless colour”) led to protests by Hindu activists and also created political ripples in a country where a Hindu nationalist party is in power.

The film, however, has turned out to be a blockbuster. When it was released on January 25, a day before Republic Day, in a single day it netted ₹57 crore at the box office. In addition, it also created a record worldwide, earning ₹106 crore globally. Pathaan is billed as a comeback movie for Khan who is 57. And its record box office revenues already show that despite any controversy, movie mania in India goes on unabated.

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Hindenburg Stands By On Its Report On Adani Group

By LokMarg 26th January 2023

Hindenburg Research on Thursday said it fully stands by its report on Adani Group and believes any “legal action taken against us would be meritless”.

“Regarding the company’s threats of legal action, to be clear, we would welcome it. We fully stand by our report and believe any legal action taken against us would be meritless,” said Hindenburg Research in a statement that was posted on its official Twitter handle.

Earlier on Thursday, Adani Group said it was mulling legal options in the US and India against Hindenburg Research after its report accused firms owned by Gautam Adani of market manipulation and accounting fraud.

Jatin Jalundhwala, Group Head – Legal, Adani Group, in a statement, said, “The maliciously mischievous, unresearched report published by Hindenburg Research on 24 January 2023 has adversely affected the Adani Group, our shareholders and investors.”

“We (the Group) are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” Jalundhwala said.

The legal head further added the volatility in Indian stock markets created by that report is of great concern and has led to ‘unwanted anguish’, among Indian citizens.

Hours after the Adani group legal head’s statement, Hindenburg Research, in its statement, said, “If Adani is serious, it should also file suit in the U.S. where we operate. We have a long list of documents we would demand in a legal discovery process.”

“In the 36 hours since we released our report, Adani hasn’t addressed a single substantive issue we raised. At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions,” the statement said, adding that the Group has instead resorted to “bluster and threats”.

Reportedly, the research firm, in its report on Tuesday, raised concerns about shares of Adani group companies having a possibility of declining from their current levels, owing to high valuations. It also said the Group’s exposure to debt was a concern.

On Wednesday, Jugeshinder Singh, the chief financial officer (CFO) of the Adani Group said the conglomerate was “shocked” by the Hindenburg Research’s report and termed it a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.

“We are shocked that Hindenburg Research has published a report on January 24, 2023, without making any attempt to contact us or verify the factual matrix. The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts,” the CFO on Wednesday said in a statement.

The timing of the report by Hindenburg Research, the CFO, in his statement, said “clearly betrays a brazen, mala fide intention to undermine” the Adani Group’s reputation with the “principal objective of damaging” the upcoming Follow-on Public Offering from Adani Enterprises, the biggest FPO ever in India. (ANI)

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Adani Group May Sue Hindenburg for 'damning' report

Adani Group Considering Legal Action Against Hindenburg

By LokMarg 26th January 2023

Adani Group on Thursday said it is considering legal options in the US and India against Hindenburg Research after its report accused firms owned by Gautam Adani of “brazen” market manipulation and accounting fraud.

Jatin Jalundhwala, Group Head – Legal, Adani Group, said, “The maliciously mischievous, unresearched report published by Hindenburg Research on 24 January 2023 has adversely affected the Adani Group, our shareholders and investors.”

The legal head said, “We (the Group) are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research.”

“The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” the legal head said in a statement on Thursday.

Hindenburg, an US investment research firm published a report claiming that Adani group had links with a labyrinth of off shore tax havens linked to Gautam Adani’s family and the firms exposure to high debt was a concern. The report also claimed that Adani group’s stock price was inflated and had significant downside risks.

On the report affecting Adani shares, Jatin Jalundhwala said, “Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares.”

Jalundhwala also mentioned Hindenburg which said that it had taken “short positions in Adani Group Companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.”

The Adani group’s legal head said, “We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the FPO (Follow-on Public Offering) from Adani Enterprises.”

Jugeshinder Singh, the chief financial officer (CFO) of the Adani Group, on Wednesday said the conglomerate was “shocked” by the Hindenburg Research’s report and termed it a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.

Reportedly, the research firm, in its report on Tuesday, raised concerns about shares of Adani group companies having a possibility of declining from their current levels, owing to high valuations.

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