The Adani Group has cast its brawl with a US short seller as an attack on India and the issue could overshadow parliament’s budget session with opposition lawmakers highlighting the ties between Asia’s richest man and Prime Minister Narendra Modi.
(Bloomberg) — The Adani Group has cast its brawl with a US short seller as an attack on India and the issue could overshadow parliament’s budget session with opposition lawmakers highlighting the ties between Asia’s richest man and Prime Minister Narendra Modi.
“The Adani Group is no ordinary conglomerate: It’s closely identified with Prime Minister Narendra Modi since he was chief minister” of Gujarat state, said Jairam Ramesh, general secretary of the opposition Congress Party, days after Hindenburg Research alleged stock manipulation and fraudulent accounting by the conglomerate.
Parliament convenes this week for its crucial budget session, where on Wednesday the government will unveil its last full-year budget before Modi seeks a third term in office in elections due in less than 15 months.
“We will certainly raise this in parliament. In which form and when that we will decide later. It’s a serious issue,” Sougata Ray, lawmaker from the opposition All India Trinamool Congress, said in a telephone interview. At least two other opposition parties will also raise the matter.
The All India Congress Committee sent a letter on Monday evening demanding answers from Madhabi Puri Buch, the chairperson of the Securities & Exchange Board of India into the investigation of some Adani Group companies by the regulator. The letter sought to know the status of the investigation, and raised questions on the authenticity of a Jan. 25 statement by the Adani Group ahead of its follow-on public offer, which said Hindenburg’s allegations had been “tested and rejected by India’s highest courts.”
The government has so far remained silent on the matter. Parliamentary Affairs Minister Pralhad Joshi said the issue would be discussed as per the rules of parliament. He gave no timeline.
Billionaire Gautam Adani, widely perceived as being close to Modi, has portrayed Hindenburg’s charges as an attack on his home country in a bid to garner support from nationalists. The tycoon has often aligned his businesses with Modi’s development goals, building capital-intensive infrastructure such as ports and airports.
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani said in its 413-page response Sunday.
It wasn’t the first time that the group was couching the dispute in nationalistic terms. Soon after the report was made public Jan. 24, Adani Group Chief Financial Officer Jugeshinder Singh released a video statement rebutting the charges with a massive Indian flag fluttering in the background. Singh also likened domestic investors participating in the sell-off of the conglomerate’s stock to Indian soldiers participating in a British-era massacre in Punjab in 1919 in a newspaper interview Sunday.
Hindenburg said the response failed to answer most of its questions and “predictably tried to lead the focus away from substantive issues and instead stoked a nationalist narrative.”
“In short, the Adani Group has attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself,” Hindenburg’s response added.
Adani’s dizzying rise closely mirrored Modi’s own journey to India’s top political job. Soon after Modi became chief minister of the western state of Gujarat, where both men hail from, he faced scathing corporate censure around the religious riots that erupted in 2002. Adani defended him and created a biennial “Vibrant Gujarat” investment summit that burnished Modi’s pro-business credentials.
The billionaire’s face-off with the short seller dominated social media in India. The hashtag #AdaniGroup was trending on Twitter Monday morning with people taking views on both sides of the debate.
“These kinds of reports where you yourself are making money have to be discounted,” said Ashwani Mahajan, co-convenor of the Swadeshi Jagran Manch, affiliated to the Rashtriya Swayamsevak Sangh — the ideological parent of Modi’s Bharatiya Janata Party. “Adani is not burning cash, assets are being built. This won’t affect broader sentiment toward India.”
The back-and-forth comes during the last leg of the follow-on offer by Adani Enterprises Ltd., which is scheduled to close Tuesday. It received overall subscriptions of 1% on Friday, when bonds and shares of Adani entities plunged — some by their daily 20% limits. Adani himself lost more than $20 billion of his personal wealth last week with the stock rout.
–With assistance from Sudhi Ranjan Sen.
(Updates with comments from government minister and Adani official)
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