In the dispute with Adani and Hindenburg, the Indian government says there is no significant impact at the systemic level. India’s Union Finance Ministry responded to a series of questions in the Lok Sabha on Monday about the shock suffered by the Adani Group after U.S. short-seller Hindenburg Research published a report accusing it of fraud and manipulation of actions. The group led by Gautam Adani has denied this.
The Union Finance Ministry said SEBI has already initiated the investigation and will complete it within two months, according to a March 2 Supreme Court order. (ITP)
The Indian government said the report did not have a “significant system-level impact,” although market capitalization fell to 60% in two months. The Finance Ministry also told Parliament that the government had yet to form a committee to investigate the allegations against the Adani group of companies.
Responding to questions from Congress Members of Parliament (MPs) T N Prathapan, Manish Tewari and Jothimani Sennimalai, who asked for an update on the probe into alleged share manipulation by the Adani group of companies, Union Finance Minister Chief Pankaj Chaudhary said the Securities and Exchange Das Board of India (SEBI) had already initiated the probe and would complete it within two months, according to a March 2 Supreme Court order.
Chaudhary added that the Directorate of Revenue Intelligence (DRI) had already submitted its report to the judicial authorities, adding, “There were investigations related to the import of power generation equipment, power transmission and infrastructure (port and SEZ) by the Adani Group companies. Completed by the Directorate of Revenue Intelligence (DRI), the report has been submitted to the relevant judicial authorities. As for the case related to importing coal from Indonesia by the Adani Group of Companies, DRI’s investigation is still ongoing. The information requested by the exporting countries through letters rogatory (LR) is being processed.
To shed light on the shock faced by the Adani Group, Chaudhary said in his written response, “The nine listed companies that make up the Adani Group recorded a decline in their market capitalization of about 60%, 2023, since January 24, 2023, to March 1, according to the report published by Hindenburg Research. These companies are not part of Sensex and have a combined weightage of less than 1% in Nifty. The volatility of shares of these companies was not significantly affected at the system level. The Nifty 50 declined by about 2.9% in January 2023 and 4.9% in January-February 2023.”
In response to another question from MP Antony, who had asked the finance ministry to provide statistics on investments by public institutions in the Adani group, Chaudhary cited a press release issued by the Life Insurance Corporation of India (LIC) on January 30. , which had stated that LIC holds a total equity and debt stake of about ₹ 35,000 crores (Four Billion Two Hundred Fifty-two Million Five Hundred Thousand Dollars) in the Adani Group.
“As per data received from general public sector 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, the total exposure in Adani Group of Companies as on January 31, 2023, is Rs 347.64 crores (Forty-two Million Two Hundred Thirty-eight Thousand Two Hundred Sixty Dollars), which is 0.14% of the total assets under management of the five companies,” Chaudhary added in his reply.
Chaudhary, however, said that while the State Bank of India (SBI) does not disclose information about the affairs of its members under Section 44 of the State Bank of India Act, 1955 and Section 13 (1) of Banking Companies (Business Acquisition and Transfer Act, 1970/1980), the national bank had clarified that its exposure to the Adani Group was well below the RBI’s Large Exposure Framework (LEF).
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