As a result of the publication of the Hindenburg Research research last week and a short-selling campaign, the market value of the Adani Group equities fell by $51 billion (4.2 lakh crore) in two trading days. Jugeshinder Singh, the CFO of Adani Group, asserts in an interview that the study’s timing was suspect and that it was planned to thwart Adani Enterprises Limited’s (AEL) 20,000 crore FPO (follow-on public offer), which is set to expire on January 31.
Table of Contents
The Report’s Accusations Against The Adani Group
Nearly half of the worries raised by the report are connected to disclosures made by Adani enterprises during the previous ten years. For instance, the investigation claimed that AEL moved the Carmichael project’s rail assets to the promoter’s private company, which wrote off their value, indicating that AEL overstated its earnings.
But the family company just reproduced the accounting that AEL had recorded write-offs in its books, acting on the advice of the relevant auditor. The CFO stated that this was a deliberate attempt to mislead, not out of ignorance or error. Singh talked about the severe hardship and the causes behind his conviction that the Adani tale is verifiable.
He said that the attempt to trick was deliberate rather than the consequence of misunderstanding or mistake. Singh talked about the pressure and the reasons he believed the Adani tale was true.
How Much Of A Short Bet Should Be Placed Based On The Company’s Intelligence?
The CFO claims that due to market delays, the company has not been able to fully ascertain what instruments the reports have examined. Another uncertainty for the company is the length of the short.
Was The Company Informed Of The Change In Plans?
The corporation saw the effect and assessed it, but with a stock that was sparsely traded and frequently shorted, they were primarily concerned about the loss of value for the minority shareholders. In addition, there is no mechanism in place at the corporation to record each and every interaction. That is one of the lessons we may learn from this. Trading on equities has not received much attention from their management. The corporation has always prioritized cash flow, performance, earnings, and other business performance metrics over market trading.
Who Is In Charge Of This Short Transaction?
The company stated that they don’t want to make any assumptions about potential offenders. They have never given it much attention, and they also think that other businesses operate in a similar manner. However, if someone is accountable, the truth will eventually come to light, and if the company learns about it, it will take harsh action. They do, however, share such a report with the relevant parties, who subsequently short the stock before dumping it—in their case, the report of lies and deceit—before dropping it. However, the information is sent rather slowly.
Did The Group Suspect Corporate Shadowboxing?
Please don’t speculate. The firm asserts that since they refrain from doing such steps, other Indian corporate sector participants would act morally.
According To The Company’s Understanding, Who Was Selling Adani Group Stocks In The Beginning?
The Adani gang is of the opinion that they are not merchants. Investors who are institutional, long-term, strategic, intergenerational, and long-term are also not selling. The data has a latency, is difficult to interpret, and is opaque if it is sold in little amounts over time to cover shorts. Since they don’t now have everything, the group won’t be aware of everything right away.
What Strategy Will The Corporation Employ If The Stock Doesn’t Rise On Monday? Increase The FPO’s Hours And Provide A Discount. Could They Cancel It, Perhaps?
The firm has made it very clear that the FPO is dominating the market in accordance with its strategy. Long-term strategic investors’ perspectives are unaffected by short-term market volatility since they are not bothered by it. Price is unimportant to seasoned, multigenerational, and strategic investors. Although an FPO offers the potential to include family offices, super HNIs, and strategic long-term investors under its umbrella, it also hinders retail involvement. They support us based on our business interactions and conversations with them. The anchor book is currently on back order. Therefore, it seems that the firm has high hopes for the development of the FPO and believes that corporate and strategic investors will fill the void left by the retail sector.
Have Anchor Investors Been Frightened By The Stock Price Decline? What Does The Company Provide Them? Is The Value Of AEL Decreasing?
The company hasn’t changed; this is just market volatility. The company serves as a platform for infrastructure and utilities. Infrastructure, transportation, and energy continue to be AEL’s key operations despite the stock’s heightened volatility. The company’s worth and story may be found in its infrastructure and utility systems, which are still in operation and are anticipated to do so tomorrow. The value of AEL, which is involved in investing and hatching enterprises, has not changed. This is what Adani Enterprises’ main strength is. Business at airports is booming, the data centre industry is flourishing, green, renewable energy projects are functioning at peak efficiency, roads are taking shape nicely, the services industry is still around, and digital platforms are running smoothly.
Is There A Fallback Strategy In Case The FPO Fails?
The corporation does not rely entirely on the capital program it raises to pay expenses or do business. They are quite thorough. All the companies in Adani Enterprises’ portfolio, including its subsidiaries, are perpetually well-financed. Simply put, it depends on whether they grow at a 20%, 40%, 10%, or 5% rate. Given that, this attack will eventually be unsuccessful. They mistakenly thought it was a tech company that needed to make money to pay its bills. The company is adopting these three steps in order to broaden its shareholder base, diversify the research companies that follow our stock, and, if required, obtain expansion equity funding.
Have You Spoken With The Securities And Exchange Board Of India (SEBI) About This Entire Incident?
Fundamentally, neither our organization nor its founders are involved in any kind of speculative activity. The assets we create and how to manage them as efficiently as possible remain the focus of our attention. Regulators won’t understand it, and that has been our strength. When we have a comprehensive grasp of everything and if we find anything that we believe ought to be disclosed to the regulators, we will share our findings. It will take time, and this is a serious problem. Any serious problem of this nature requires careful evaluation and assessment, which takes time and effort.
The Last Call
The inquiry found that the Adani Group overstated revenue because it transferred control of the Carmichael project’s railway assets to the promoter’s private company, which promptly wrote down their value. On the recommendation of the competent auditor, the family business, however, replicated the accounting that AEL had thoroughly documented the write-off in its books. The CFO stated, “This is not ignorance or an error, but a willful attempt to deceive.”
