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Gautam Adani’s Wealth Evaporates Nearly $20 Billion In A Span Of Six Hours; Brace For More Or Saved By PM Modi?

Gautam Adani, the world’s fourth richest person, may have never imagined that his sprawling empire and the massive wealth he has created for himself and his family would evaporate in a matter of mere six hours to the tune of a whopping $20 billion. 

Even as this proclaimed king of building, India has dismissed the Hindenburg report done by a tiny New York firm as “stale” and “baseless”.

However, it managed to kick a major hole in the empire’s walls and was apparent when the Indian markets reopened on Friday.

The sprawling, complicated structural Adani Group’s various entities saw a huge drop in the stock markets – bonds and shares fell and fell some more – its units Adani Green Energy and Adani Total Gas crashed by the daily 20% limit, in the end, the tremendous decline delivered punishing losses after years of massive gains. 

In fact, such was the impact delivered by this tiny firm the that not only was it Adani’s biggest wealth wipeout ever but also the steepest market-related drop in the history for anyone in Asia!

In just over six hours of trading, the group lost more than $50 billion in market value, costing Adani above $20 billion, or about one-fifth of his total fortune, according to the Bloomberg Billionaires Index. 

Bloomberg, which started tracking the fortunes of the world’s wealthiest a decade ago, witnessed a shocking blow to a man whose empire and wealth in recent years had skyrocketed up the ladder of the world’s supremely rich at what seemed like an unstoppable pace.

Adani’s Empire, What Next?

It is needless to say that it is embarrassing not only for Adani Group and the people associated with it and also for India now that the spotlight falls on India’s most powerful, influential family built, conglomerate that functions beyond the boundaries of this country in other parts of the world.

Why? Because the manner in which family-built Indian conglomerates are owned, operated and bankrolled is out!

What has further happened is that questions about how these revelations will impact the group’s ongoing share sale and how the regulators in India and globally will react – are now under the spotlight too.

Wow, Check Adani Response

Adani’s top lawyer, with great concern for the Indian citizens, said 

“The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,”.

Surely, one does not think about these concerns when Indian citizens are investing in the loss-making, debt-ridden, over-valuated share price of the various entities owned by this giant Indian company.

He further went on to say that Hindenburg’s report is mischievous, unresearched and unsubstantiated.

Hindenburg, in turn, retorted that Adani has “resorted to bluster and threats.”

Why Is This Concerning?

The Adani group is a business web that includes port and airport operators, coal mining and trading, natural gas, media and cement. Its expansion plans are closely aligned with the development and economic goals of Indian Prime Minister Narendra Modi – but at what cost?

The report’s revelations also come at a sensitive time for Gautam Adani. As a close ally of our Indian Prime Minister Narendra Modi, the business tycoon has been seeking to diversify his empire and ascend ambitious expansion plans abroad. 

Also, Hindenburg’s report has landed right before a $2.5 billion share sale in Adani Enterprises on offer for institutional investors. 

Its ability to give precise answers to accusations will have ramifications not just for the businessman’s own goals but also for global confidence in the integrity of Indian markets.

Modi Will Save Adani

The conflict has sharply divided global investors, while many Indian analysts say the Adani group won’t face a severe domestic fallout since its fortunes and strategy are tied to PM Modi’s. 

In opposition, others see Adani Group’s negation as inadequate, 

Conclusion: It is clear that India’s businesses are plagued by unclear business operations and have largely gone undetected or unpunished for years.

If there is a political fallout, then one can expect legal action and perhaps a jail term for the unfortunate fallen out-of-grace individual(s).

But for the Adani Group, this may not happen despite the fact that it engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.

The conglomerate’s “substantial debt,” which includes pledging shares for loans and several of its key leaders are Adani family members, that his brother Vinod “manages a vast maze of offshore shell entities” that move billions into Adani companies without required disclosure; and that its auditor seems incapable of complex audit work – are all going to be swept under the carpet!

 

naveenika
naveenika
They say that the 'pen is mightier than the sword'; I believe definitely so! Today news is delivered at breakneck speed, but what makes news articles different from one source to another? It is the way it is delivered-facts, research, the point of view with the correct amount of panache, the X factor! Writing is my chosen profession after 15 years in the corporate sector, and I strive to tick every box even as I am grateful to my readers for their precious time and patronage!
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