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Center Assesses The Financial Records Of The Adani Group

Center Assesses The Financial Records Of The Adani Group

According to two high-ranking government officials, the Ministry of Corporate Affairs has begun an initial investigation of the financial statements and other regulatory submissions made by Adani Group over the years.

Adani Group has responded to accusations of stock manipulation and inappropriate use of offshore tax havens made by US-based short-seller Hindenburg Research, stating that the claims have “no validity” and are motivated by an inability to understand Indian law. The Indian multinational corporation further said it has always been transparent with authorities.

Adani Group has cancelled a $2.5 billion share offering this week in response to the stock market rout caused by the Hindenburg report on January 24. This is the first time the federal government in New Delhi has looked into the Adani Group, but it isn’t the first time the ministry has.

The Indian markets regulator is already looking into the situation, including the share price drop, any irregularities in the cancelled share offer, and probable price manipulation, but no report has been released as of yet because not even the regulator can do their tasks. One government source stated on Thursday that a new ministry inspection process had begun, citing “Section 206” of India’s Companies Act, which mandates annual checks of submitted financial data.

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The Director General of Corporate Affairs has ordered an investigation. The first senior government official with firsthand knowledge of the procedures assured the media that the ministry has been closely watching the situation and will take appropriate measures in due time. When asked for a response, a representative from Adani Group did not provide one right away. When approached by the media for comment, neither the Ministry of Corporate Affairs nor the Office of the Director General provided any.

Another government source said the process had begun, and that it will examine the company’s corporate governance policies. Due to the sensitive nature of the procedure, the government officials asked not to be identified. According to two other people with knowledge of the situation, the federal government of India can request more records from a corporation under the Section 206 legal provision under the company’s law. These additional documents could include meeting minutes or board resolutions.

After the share prices of Adani Group companies plummeted on Friday, leading some members to call for an investigation out of concerns that it could set off a domino effect in the Indian economy, parliamentarians in both houses of parliament were forced to adjourn in disorder.

For the past 12 days, the Adani Group, which is headed by Gautam Adani, has been hit hard by the ‘exposé’ published by US short-seller Hindenburg Report. Adani withdrew the FPO to improve confidence, but the company’s other actions haven’t paid off yet. During earnings season, the company’s stock has plummeted due to the accumulation of bad news.

Meanwhile opposition on govt loud silence

Aswath Damodaran, a stock market expert, has estimated a value for the company’s shares of $947. The results for Adani Transmission are slated to be released today, while those for Adani Ports and Adani Green are scheduled for tomorrow. Today
will be the release of Adani Power’s numbers. The opposition is also citing the Hindenburg Report’s criticism of Gautam Adani to attack the government. As a result of disturbances related to the issue, parliament was forced to adjourn last week.

Why is the government trying to avoid discussing the Adani dispute?

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On Monday, senior Congress lawmaker and Rajya Sabha MP Randeep Singh Surjewala blasted the Centre over the Hindenburg-Adani row, challenging the government’s ‘loud silence’ on the subject. “Why is the government unwilling to deal with the Adani scam? To what end are the Finance Minister and Prime Minister Modi avoiding the Parliament? To what end did the government, LIC, and SBI risk their capital on Adani’s failing businesses?” The statement was made by Surjewala.

Aside from that, he demanded an explanation from the government for the ‘dropping’ valuations of LIC and SBI. “What happened that caused a 30,000-crore loss in the value of money invested in Adani’s shares? What changed from an Amrit Kaal budget to a “Mitra Kaal” budget to appease PM Modi’s friend is a mystery to the country “That’s what he claimed, he claimed.

On Tuesday, Congress member Rahul Gandhi raised eyebrows in Parliament by questioning businessman Gautam Adani’s meteoric ascent to business and personal wealth since Prime Minister Narendra Modi came to office in 2014. The opposition leader made these claims in a speech to the Lok Sabha, suggesting that the prime minister was supporting the Adani Group.

Following a precipitous decline in the value of Adani Group company stock last week, the conglomerate cancelled its planned Rs 20,000 crore follow-on public offering, and Adani was no longer considered Asia’s richest man. Gandhi brought up the subject of Adani’s electoral bond donations to the BJP during Tuesday’s Lok Sabha session.

A question posed to Modi: “How often have you [on international trips] accompanied Adani ji?” What is it?’ Gandhi questioned. How often did Adani ji come along on your international vacation later on? How many times did he contact you after you landed in a foreign country? Next, he asked, “How frequently has Adani ji secured contracts in foreign nations after your visits there?” The Lok Sabha representative from Wayanad stated that business schools should conduct a case study on how to leverage government power to promote individual enterprises.

Gandhi further claimed that Modi was behind the decision to give the Adani Group, a business behemoth with no prior experience in the defence industry, control of India’s defence dealings with Israel. Gandhi claimed that when Modi visited Israel, “it was like magic” for Adani to secure the first MRO contract for Indian aircraft, as well as the contract for Israeli drones and small guns. Adani has “full control” of defence ties between India and Israel.

The legislator said that Adani received a $1 billion loan from the State Bank of India shortly after Modi’s trip to Australia. During Modi’s trip to Bangladesh, Adani reportedly secured a 25-year contract to sell electricity in the country. The chairman of Sri Lanka’s Ceylon Electricity Board, MMC Fernando, revealed this information to a Parliamentary committee in an open hearing in June 2020. He said that President Rajapaksa had told him that Prime Minister Modi had pressed him to award the wind power project straight to Mr Adani.

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Gandhi said, “Well this is India’s foreign policy.” This “foreign policy” is beneficial to Adani’s corporate interests and not India’s. Gandhi went on to say that “thousands of crore rupees” were being handed to Adani by public sector banks in India. Life Insurance Corporation’s exposure is 36,000 crore, State Bank of India provides 27,000 crore, Punjab National Bank provides 7,000 crore, Bank of Baroda provides 5,500 crore, and SBI provides 27,000. Adani is getting $3 billion from customers at the State Bank of India and other PSUs.

Gandhi claimed that Adani owns a slew of offshore “shell” firms, referencing the Hindenburg report as evidence. He then questioned the Centre on the origin of the “thousands of crores of rupees” being sent to India by foreign corporations. I’m curious if the Indian government questioned Adani about these shell companies, given that he invests in strategic sectors and controls significant segments of the country’s transportation infrastructure (including its ports, airports, and defence industry).

Why are you so clueless about the conglomerate’s ownership of these shell businesses though it operates in so many crucial sectors? A year after Adani’s announcement that he would invest $50 billion to develop the world’s largest green hydrogen system, the politician noted how the Budget provision gave tremendous incentives for green hydrogen.

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