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Adani episode has created concern amongst project promoters in India

By NS Venkataraman* 

The recent Adani episode , when a US based short seller, ( who claims to be a financial research entity), made various allegations against Adani group and which has caused huge furore in Indian stock market and which was widely publicized by Indian media and caused furious national debate particularly amongst politicians, has created considerable alarm amongst the Indian project promoters.
In spite of the wide allegations by US based short seller against Adani group , discerning thinkers are of the view that Adani group has been sinned against rather than sinning.
The fact is that financial institutions who have extended loan to Adani group and equity holders have no complaint to voice against the group. The group has not defaulted in payment of Interest or repayment of loan as per the terms of agreement. The equity share holders have been benefited over the years , as the share value have been at good level.
Recently, when Adani group announced FPO (Follow on public offer ) to the level of Rs.20,000 crore, it was fully subscribed, which indicate the confidence level of the financing institutions in India and abroad, who have responded to the FPO.
Several of projects implemented by Adani group such as in the field of renewable energy or coal mining or port have been operating at reasonably efficient level. In implementing new projects, Adani group enjoys the reputation of strictly adhering to the schedules, except in the cases where the projects have been deliberately blocked by agitators , having vested interests.
Further, watchdogs in India such as Securities and Exchange Board of India (SEBI ) and Reserve Bank of India ( RBI) have not evinced any concern about the performance of Adani group. Major organisations in India like Life Insurance corporation of India (LIC), State Bank of India (SBI) who have invested in Adani group, have not expressed any concern about Adani group.

Living in glass house and throwing stones

The US based short seller Hindenburg , which has expressed concern about Adani group’s performance and style of operations and alleged irregularities, has no particular reputation to lose. It is reported that there are three criminal charges against this entity and it has been banned from commenting about the companies that are registered in the New York Stock Exchange.
This is the case of those of sitting at the glass house and throwing stones at others. Should not those who make such allegations have adequate credibility? Are the shortseller and critics in the same page?
The various charges levelled against Hindenburg against Adani group have been vehemently denied by Adani group and it’s Chairman has assured the financiers and share holders that the performance of the group is reasonably at acceptable standards and the allegations of the short seller are false.
What causes concern is that several critics in India seem to have more faith in the allegations of US based short seller rather than the pronouncements of watchdogs like SEBI and RBI and other organisations in India who have invested in Adani group. In such circumstances, one wonders whether US based short seller and critics in India have similar attitude towards Adani group.
Critics in India are adding more criticism against Adani group than the US based short seller, by stating that the equity holders and financing companies involved with Adani group face calculated risk, since projects of Adani group have long gestation period and proposed projects such as green hydrogen face uncertainty due to high cost of production and so on.
All over the world , several leading organisations are feverishly now working to optimize green hydrogen process technology and scientists are likely to succeed in their efforts. Several world governments including Government of India have promised to provide adequate support for the green hydrogen projects in several ways.
It is not true that all Adani’s projects have long gestation period, as it’s port operations, mining operations, airport operations are ongoing activities.
Adani group is certainly one of the very few organisations in India who target to become a multinational company, as evident by Adani’s coal mining operations in Australia , recent acquisition of port in Israel and so on. One would think that Indian government and people should encourage Adani group in such bold and forward looking global project activities.
The allegations about financial management of Adani group are again not valid.
There are several options for raising finances for the projects and so long the methods are lawful and legal , there should be no complaint. It is common practice in all global organisations to carry out fund transfer between one group company to other group company, if it would be in the larger interest of the projects of the group.
So long as the fund transfer proposals are approved by the duly constituted board of the companies , it should be considered as appropriate and legitimate.

Fear of the project promoters

The Adani episode has created concern amongst the project promoters in India, as to whether this is a new trend of short sellers and blackmailers spreading false allegations against new projects for any ulterior reason.
When such allegations are considered as breaking news by the media who extensively publicise the allegations without any investigation, such developments can upset several meaningful projects.
With the Government of India fixing the target of 5 trillion US dollar economy in the next few years , large capital investments are required by project promoters and funds have to be raised from the market. As more such large projects are likely to be announced, such blackmailers can cause serious problems and impediments for India.
Government of India should find some way to prevent the short sellers and blackmailers from having a field day with the baseless allegations.
Of course, Indian media should also equip itself with greater technical knowledge to assess the projects in appropriate manner , so that the short sellers and blackmailers cannot misuse the media to spread their false and motivated propaganda.
---
*Trustee, Nandini Voice For The Deprived, Chennai

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