NEW DELHI: Union Finance Minister Nirmala Sitharaman it said here Saturday that the cancellation of Adani Enterprises’ follow-on public offering (FPO) will have no impact on the economy and no effect on the economy’s image.
Responding to questions about the collapse of Adani Group shares, the finance minister said: “The regulators will do their job and they are independent from the government. It is up to them to do what is appropriate. Keeping the market regulated and in optimal condition is Sebi’s role, and he has done it ”.
Sitharaman said that RBI has already released its statement on the Adani matter and that public sector banks and LICs have released statements on their exposure to the group.
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Adani Group Companies Lose Over $100 Billion: Things You Need to Know
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Shares of Adani group companies have been in freefall since Hindenburg released his report exposing the group of stock manipulation and more.
Adani Group’s market losses have increased to more than $100 billion, prompting concerns about their potential systemic impact.
Since Hindenburg’s January 24 report, Adani group companies have lost nearly half of their combined market value.
The Adani Group led by Gautam Adani, whose shares have been one of the driving factors of the stock markets for the past 3 years, is now finding it difficult to even stay in the positive zone for the past 6 days.
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On 24 January, the day Hindenburg released this report, a share of Adani Enterprise cost Rs 3,442.75 at the close of the trading day. Today, the stock is priced at Rs 1,564.70, which is a drop of 54.55% in just 6 sessions.
Adani Ports lost 39%, Adani Power 26.43%, Adani Transmission 43.49%, Adani Green Energy 45.75%, Adani Total Gas 56% and Adani Wilmar 26.46%.
Adani, 60, is also no longer Asia’s richest person, having slipped down the list of the world’s richest to 17th with his net worth nearly halved to $64 billion in a week, according to the list by Forbes.
Last week’s Hindenburg report exposed misuse of offshore tax havens and manipulation of stocks by the Adani group. He also raised concerns about the high debt and valuations of seven Adani-listed companies.
Adani Group denied the allegations, saying the short seller’s stock manipulation allegation had “no basis” and stemmed from ignorance of Indian law.
In its official response to the Hindenburg report, Adani Group likened the damning allegations to a “calculated attack” on India, its institutions and growth story.
Adani Group has decided not to proceed with its FPO of Rs 20,000 crore in the interest of its subscribers. The FPO was canceled one day after being fully enrolled.
Gautam Adani said that given the unprecedented market movement, the company’s board felt that proceeding with FPO would not be “morally correct”.
RBI sought details on credit institutions’ exposures to the Adani Group, following market conditions.
Sebi began looking into the steady slide in Adani Group’s shares. He is also investigating possible irregularities in a stock sale by his flagship company
Swiss lender Credit Suisse has stopped accepting bonds from Adani group companies as collateral for the margin loan. Citigroup’s wealth unit also said it has stopped extending margin lending to its customers against Adani Securities.
A stock price rout of Adani group companies had culminated in the cancellation of the FPO of the group’s flagship company, Adani Enterprises. FM said in an interview with a news channel on Friday that no matter how much the issue is discussed globally, it’s not an indication of how well-governed financial markets are.
Addressing the media on Saturday, Sitharaman said that the cancellation of the FPO will have no impact on the fundamentals of the economy. “How did our foreign exchange reserves grow by $8 billion? Our macroeconomic fundamentals or the image of our economy have not been affected,” she said.
Sitharaman said that every market witnesses fluctuations, FPO cancellations and exits of foreign institutional investors. “How many times have FPOs been withdrawn and how many times has the country’s image suffered,” she asked.
Hindenburg vs Adani: ‘Regulators will do what needs to be done,’ says Nirmala Sitharaman
