New Delhi: Finance Minister Nirmala Sitharaman said the Centre will let regulators do their job to deal with the allegations of fraud against the Adani Group.
The US short-seller Hindenburg Research last week accused the Adani Group of improper use of tax havens and stock manipulation. It also drew attention to the high debt level of the conglomerate. The stock market has been seeing a sell-off since the allegations came to light. Seven listed companies of the Adani Group have lost over $100 billion combined since the report was published. They also lost half of their market value.
Speaking to the media, Sitharaman said the Reserve Bank, other banks, and the LIC have spoken about the development. "Regulators are independent of the government... and they are left to themselves to do what is appropriate for keeping the markets regulated in prime condition. The SEBI (Securities and Exchange Board of India) has the wherewithal to keep that prime condition intact."
The RBI on Friday said India's banking system remains resilient and vigilant while continuing to monitor the stability of the sector. It did not name the Adani Group in its statement. "Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage, and profitability are healthy. Banks are also in compliance with the Large Exposure Framework guidelines issued by the RBI," said the Central bank.
When asked about the Adani Group cancelling a fresh sale of shares, she responded by asking how many times have FPOs (Follow on Public Offers) withdrawn from this country and how many times has the image of India suffered because of that. How many times have the FPOs not come back?
The Adani Group has denied the allegations and said Hindenburg Research's report on stock manipulation has "no basis" and it comes from an ignorance of Indian law. The group said the report is aimed at damaging its reputation ahead of a large share offering. CFO Jugeshinder Singh said the company was shocked by the "malicious combination of selective misinformation and stale, baseless and discredited allegations" and claimed the Group "has always been in compliance with all laws."
The research report questioned how the Adani Group has used offshore companies in tax havens like Mauritius and the Caribbean Islands and pointed out that certain funds and shell companies tied to the Group "surreptitiously" own stock in Adani listed firms. It also observed that Adani companies have debt which puts the entire group on a "precarious financial footing." Seven Adani listed companies have an 85% downside on a fundamental basis due to what it called "sky-high valuations," reported Reuters.
Hindenburg said the report is based on an investigation that lasted over two years. Its experts reviewed documents and spoke to people including former executives at Adani Group.