You may have heard of the Adani vs. Hindenburg dispute, which is now making headlines all over the news. And no, its not good. Rather they have been accused of dealing with the biggest scam in corporate history of India.
Gautam Shantilal Adani, the sole proprietor of Adani Group & Industries, was born in a Gujarati Jain household on June 24, 1962, to parents Shantilal Adani and Shantiben Adani. He is the youngest of the seven siblings. His father ran a little textile company. He enrolled in Gujarat University for a bachelor's degree in commerce but dropped out after the second year.
Source:- https://www.businesstoday.in/markets/stocks/story/adani-enterprises-fpo-opens-today-should-you-subscribe-to-the-issue-amid-volatility-367775-2023-01-27
In 1978 he moved to Mumbai to work as a Diamond sorter for Mahendra Brothers. His elder brother, Mahasukhbhai Adani, purchased a small plastics factory in 1981 and urged him to join him. This is the initial Adani company, which has since grown to become Adani Group's largest exporter.
Ahmedabad is the headquarters of the Adani Group. In 1988, he started Adani Exports, which is now known as Adani Enterprises, the parent company of Adani Group. In 1991, the economic liberalization policies of the country helped them expand their business to foreign trade. It began operating 4620MW thermal power plants in 1996, becoming the country's largest thermal power generator. The company then entered the electricity generation business in 2006. Solar Energy Corporation of India (SECI) awarded him with the world's highest solar offer of $6 billion in May 2020. In September 2020, he acquired a 74% share in Mumbai International Airport, India's second busiest airport after Delhi.
This Group initially dealt with agricultural and electricity commodities, but has since expanded to include port management, mining, electric power generation and transmission, airport works, infrastructure, natural gas, and food processing. With all its diverse businesses, he stood to be the world’s third richest person according to the Fortune, August 2022 and Asia’s richest person in February 2022 surpassing the rank of Mukesh Ambani. Adani Group has also grown to be one of the largest NSE (National Stock Exchange) members.
Adani has also been extremely helpful to the Indian Government during the difficult times. In 2020, he donated rupees 100 crore to the PM Cares Fund, 5 crores to the Gujarat CM Relief Fund, and 1 crore to Maharashtra CM Relief Fund to combat the country's coronavirus outbreak.
Now you may be wondering, how did Adani group get into this controversy?
Hindenburg, a New York-based investigative and investment research firm, found 17 other crimes by other corporations before reporting the Adani Group fraud. It has a great track record in the field of investigation and has brought many unknown cases out in the open.
Source:- https://www.onmanorama.com/news/business/2023/01/30/all-about-hindenburg-research-adani-group-controversy.html
They recently disclosed their two-year conclusions from their research that Adani company has been manipulating their incomes, shares, and engaging in malpractices in January 2023. The Adani group has been accused of stock manipulation and accounting fraud. According to the statement given by NDTV, Adani received his shares from a third party without discussing it with the company’s founders. The rapid outbreak of this news has raised serious concerns among the Indians. Because of Adani’s connection to PM Narendra Modi, allegations were levelled against him as well.
And these allegations caused a major turmoil in the market with the share prices falling drastically. The political connection just added the fuel to the fire.
After the outbreak of the news, the share prices of the Adani Group have been falling rapidly ever since. Adani has already given a statement that these allegations are fraud, and the truth would soon come out. A proper review will be done as Adani Group is one of the most influential business group in the country, and necessary action will be taken, said the officials.
The allegations made by Hindenburg on Adani Group is casting doubt on the government and its ability to function. It is well known that both Adani and Modi are from Gujarat, and during the reign of Narendra Modi, Gujarat has undergone remarkable changes, despite that many questions have risen against the Adani Group and the PM.
It is well known that the Adani Group has a media division. NDTV founders Prannoy Roy and Radhika took a 400-crore rupee loan from Adani Group a few years back. On 23 August, Adani Group announced their control on NDTV by purchasing 29.18% of share in the NDTV through purchase of Vishvapradhan Commercial Private Limited (VCPL). Adani Group has so increased their business in the field. The founders of NDTV were forced to resign because of this. This also created headlines back in 2022.
Source:- https://www.inventiva.co.in/trends/to-shelve-its-rs-1000-crores-bond/
Now the question arises:
Why is India at stake if Adani Group shares fall?
Adani Group is one of the biggest players in the country. It is one of the most diversified groups in India with seven public trading companies in the stock exchange. It is the third conglomerate in the country preceded by TATA and Reliance. It has contributed towards development, infrastructure, transport etc. in the country under Pan-India works. It has even set up itself as a market leader in many sectors like transport, power, infrastructure etc. After the allegations by Hindenburg, the Adani Group company’s profits have fallen by almost $100 Billion. India’s stock market (NSE) went down by 4% in 6 days and foreign funds sold at $2 billion since January 24.
Impact of Adani Group fall on Indian economy:-
The tumult of the allegations had a great impact not only on the Adani Group but also on the banks that gave loans to the company. State Bank of India also saw a decrease of 11% in profits. Foreign investors pulled out around $2 billion out of India’s stock market. It came as a huge shock to the country. The news has created a negative publicity which may discourage the investor’s desire to invest in Indian stock market.
The Adani businesses are helping in the development of ports to infrastructure, coal mines to power plants. It is India’s largest private operator of sea and ports, and it also controls 33% of India’s air cargo traffic and 24% of shipping. It is a great fright for Indian Government as India’s infrastructure and its progress is indirectly related to the company’s growth.
Adani’s retort to the allegations:
Adani has responded to the report in a 413-page report. Firstly, he has cleared that the allegations made by Hindenburg were an unjustified and unauthorized attack on the country and not mainly on the company. It has questioned the independence, integrity, quality of Indian institutions, growth, and ambition of India. He also added that the report has dishonored the Indian regulators and judiciary. He added that the report is neither independent nor objective nor well-researched.
He has given answers to the 88 questions asked in the Hindenburg report saying that 65 of them were already answered in the annual reports on their websites, 18 are related to the shareholders and third parties and 5 are the invalid allegations which are based on imaginary facts.
He concluded by stating that Adani Group follows all the applicable laws, rules, and regulations of the government. He added that they have a proper governance framework. He spoke about his main goal of contributing to the country and moving India forward.
Everyone has been waiting for the resolution to this problem. What do you think? Why did Hindenburg bring out such a report on one of the richest people in the world? What is the hidden conspiracy? Well only time can tell.
Written by - Padmanvitha Bommisetty
Edited By- Natasha
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