On Adani-Hindenburg row, Indian government says no significant impact at systemic level

The Indian Union Finance Ministry on Monday answered an array of questions in the Lok Sabha over the impact that the Adani Group of companies had suffered after US short-seller Hindenburg Research came out with a report accusing them of fraud and stock manipulation-- a claim the Gautam Adani-led group has denied.

The Union finance ministry said the SEBI has already taken up the investigation and would conclude it within two months as per a Supreme Court order dated 2 March. (PTI)

The Indian government said the report did not have any "significant impact at the systemic level" although their market capitalisation within two months had dipped to 60%. The Finance Ministry also informed Parliament that the government had not constituted any committee to investigate the allegations made against the Adani Group of companies.

Replying to questions asked by Congress members of Parliament (MPs), T N Prathapan, Manish Tewari and Jothimani Sennimalai, who had sought an update on the investigation into the alleged stock manipulation by the Adani group of companies, Union minister of state for finance Pankaj Chaudhary said that the Securities and Exchange Board of India (SEBI) had already taken up the investigation and would conclude it within two months as per a Supreme Court order dated 2 March.

Chaudhary further added that the Directorate of Revenue Intelligence (DRI) had already submitted its report before the judicial authorities, while adding, "Investigations pertaining to imports of Power Generation, Power Transmission, and Infrastructure (Port & SEZ) Equipment by Adani Group companies have been concluded by Directorate of Revenue Intelligence (DRI) and report has been submitted before the relevant judicial authorities. As regards the case pertaining to imports of Indonesian coal by Adani Group of Companies, investigations by DRI have not reached finality as the information sought from exporting countries through execution of Letters Rogatory (LRs) is under litigation."

Shedding light on the impact that the Adani group had faced, Chaudhary in his written reply said, "The nine listed companies forming part of the Adani Group witnessed a decline of around 60% of market capitalisation from January 24, 2023, till 1 March 2023 subsequent to the report published by the Hindenburg Research. These companies are not part of Sensex and have a combined weight of below 1% in Nifty. The volatility in the stocks of these companies have not had any significant impact at the systemic level. Nifty 50 declined by around 2.9% in the month of January 2023 and by around 4.9% in the 2-month period of January and February 2023."

While replying to another query asked by Congress MP Anto Antony, who had asked the Finance Ministry to show statistics regarding investments made by the public sector institutions into the Adani group, Chaudhary cited a Life Insurance Corporation of India (LIC) press release dated January 30, which had stated that LIC has a total holding of around ₹35,000 crores under equity and debt in Adani group.

"As per data received from Public Sector General Insurance companies, namely New India Assurance Company Limited, United India Insurance Company Limited, National Insurance Company Limited, Oriental Insurance Company Limited and General Insurance Corporation of India, total exposure in Adani Group of Companies as on 31.1.2023 is ₹347.64 crore, which is 0.14% of the total AUM of all the five companies," Chaudhary added in his reply.

However, Chaudhary said that although the State Bank of India (SBI) could not divulge any information relating to or to the affairs of their constituents under Section 44 of the State Bank of India Act,1955 and Section 13(1) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, the national bank had clarified that its exposure to Adani group was well below the Large Exposure Framework of RBI (LEF).