FM on Adani row: Regulators will take own actions

“It’ll be regulators who’ll do their job. RBI made statement, prior to that banks,

came out & told about their exposure (to Adani group). Regulators independent of govt, they’re left to themselves to do what is appropriate so market is well regulated. So the regulators will do their jobs,” said Sitharaman in a press conference.

She also said that the markets are well-regulated. “Actually, for keeping the market regulated well in prime condition, the SEBI is the authority and it has the wherewithal to keep that prime condition intact,” she added.

Earlier, Sitharaman said her country’s markets were “well regulated” and she did not expect the controversy around tycoon Gautam Adani’s business empire to affect investor confidence.

The combined market cap of Adani Group’s listed units has collapsed by more than $120 billion — about half of the group’s value — since US short-seller Hindenburg Research released an explosive report last week.

It accused Adani of accounting fraud and artificially boosting its share prices, calling it a “brazen stock manipulation and accounting fraud scheme” and “the largest con in corporate history”.

“One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed,” Sitharaman said in an interview.Sitharaman said public sector financial institutions had released detailed statements showing they had limited exposure to Adani Group and would not be significantly affected by the share crash.

“I think the investor confidence which existed before shall continue even now,” she added.

Adani-Hindenburg Row
Gautam Adani, who made a vast fortune mining coal and trading before expanding into construction, power generation, manufacturing and media, was Asia’s richest man and the world’s third wealthiest before the troubles began with Hindenburg’s report.

By Friday, his net worth had halved to $61 billion, according to Bloomberg’s Billionaire Index, where he dropped to the 21st spot worldwide.

He has said little publicly since the troubles began, though in a video address after Adani Enterprises cancelled its already fully subscribed share offering he promised to repay investors. The company has said it is reviewing its fundraising plans.

Hindenburg’s report said it was betting against seven publicly listed Adani companies, judging them to have an “85% downside, purely on a fundamental basis owing to sky-high valuations.” Other issues in the report included concerns over debt, alleged use of offshore shell companies to artificially raise share prices and past investigations into fraud.

Adani’s speedy, debt-led expansion in recent years caused his net worth to shoot up nearly 2,000%. Even before last week, critics said his ascent was aided by his apparent close ties to Modi and his government. Analysts say he has been successful at aligning his priorities with that of the government by investing in key sectors, but point out that he also has major infrastructure projects in states that are ruled by opposition parties.

“The question now turns to the future of the Adani group and how they will grow,” said Aveek Mitra, founder of Avekset Financial Advisory.

As a company heavily involved in infrastructure — from airports and ports to highways — they need financing to grow in order to service their debt, which stands at $30 billion, out of which $9 billion is from Indian banks.

Adani may be able to sell some assets and continue its expansion, but at a much slower pace than earlier, Mitra said.

“Banks, financial institutions and investors will think five times before investing now ,” he added.

(With inputs from agencies)