New Delhi: The Union government has said that there is no probe committee from its end to investigate allegations against the Adani Group but the Securities and Exchange Board of India (SEBI) has undertaken an “investigation into the market allegations” against the conglomerate.
The government also said that it had submitted to the Supreme Court that it was “already enquiring into the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report”.
SEBI to submit a report into allegations against Adani group in two months
In response to a question from Congress MP Manish Tewari, who had also asked about the details of the agenda of the SEBI investigation and the proposed timeline of its completion, the minister of state for finance, Pankaj Chaudhary, stated that the Supreme Court has directed SEBI to conclude the ongoing investigations within two months.
To a query from the MP on “the scope/remit of the Committee to investigate the Adani Group as suggested by the Government to the Supreme Court and the reasons for giving such suggestions/names in a sealed cover”, the Minister said “the Government of India submitted its suggestions on the remit of the Committee proposed to be constituted” by the apex court.
He added that the suggested terms of reference were shared with the petitioners on the directions of the court. These directed the panel “to ascertain and submit a report regarding the truthfulness or otherwise of the allegations made against Adani group of companies in the Hindenburg Report; to ascertain and submit a report regarding Hindenburg’s admitted claim of taking a ‘short position in Adani group Companies through US traded bonds and non-Indian traded derivatives instruments’ prior to the publication of its subject report with all underlying transactions undertaken/ made either by Hindenburg itself, its associated companies/ concerns and/ or connected entities/ individuals, whether within or outside India in violation of any regulatory/ penal/ preventive or other statutory provisions”.
Furthermore, the reply stated that the panel would “ascertain and submit a report regarding the details of all undisclosed ‘short position’ and/ or other transactions, source of funds and profits made by short sellers in India or abroad prior to and/or in near proximity of the Hindenburg report” and “suggest measures to strengthen investor awareness including at the point of trade”.
DRI probe into import of Indonesian coal by Adani group has ‘not reached finality’
Several other MPs also raised questions on the Adani issue in the Lok Sabha.
Another Congress MP S. Jothimani asked about the key findings and outcomes of the probe by SEBI and the Directorate of Revenue Intelligence (DRI) into the Adani group companies. In reply to her question, the MoS finance submitted that “investigations pertaining to imports of Power Generation, Power Transmission and Infrastructure (Port & SEZ) equipment by Adani Group companies have been concluded by Directorate of Revenue Intelligence and report has been submitted before the relevant judicial authorities”.
As regards the case pertaining to imports of Indonesian coal by the Adani Group of companies, the minister said, “investigations by DRI have not reached finality as information sought from exporting countries through execution of Letters Rogatory (LRs) is under litigation.”
‘Nine Adani companies witnessed 60% erosion of market cap after report’
Congress MP from Thrissur T.N. Prathapan asked about the “investigation into the stock market manipulation by Adani Group of Companies”. To a query from him on “whether the Government is aware of the fall in the fortune of the head of Adani group of companies and if so, the details thereof and the reaction of the Government thereto; and whether the Government is aware of the reasons behind the said fall in the fortune of Adani group of companies”, the MoS Finance stated that
“the nine listed companies forming part of Adani Group witnessed a decline of around 60% of market capitalization from January 24, 2023, till March 01, 2023 subsequent to the report published by Hindenburg Research.”
The Minister added that “these companies are not part of Sensex and have a combined weight of below 1% in Nifty.” He added that “the volatility in the stocks of these companies have not had any significant impact at the systemic level. Nifty 50 declined by around 2.9% in the month of January 2023 and by around 4.9% in the 2-month period of January and February 2023.”
‘Centre has not constituted any committee to probe allegations against the Adani group’
To another question from Communist Party of India MP K. Subbarayan on “whether the Government has constituted any Committee to investigate the allegations made against the Adani Group of companies by short-seller Hindenburg Research of the US”, the minister replied in the negative.
Yet another question was posed on the issue by Revolutionary Socialist Party MP N.K. Premachandran who asked if the Government has analysed the impact of the Hindenburg report in the corporate sector of the country and if it proposed to “restrict disbursement of further loans to the likes of Adani Group of companies from nationalized banks and financial institutions of the Government in the light of the said report”.
To this, Chaudhary answered that “as per Reserve Bank of India (RBI), banks are free to take credit-related decisions based on internal assessment of the commercial viability of the loan within their Board approved policies and within RBI’s prudential guidelines. Further, RBI has informed that under the provisions of section 45E of the Reserve Bank of India Act, 1934, RBI is prohibited from disclosing credit information.”
LIC debt exposure to Adani group was Rs 6,182 crore on March 5
Meanwhile, Finance Minister Nirmala Sitharaman said in response to a written question from Congress MP Deepak Baij, who had asked about the details of loan/credit exposure of various public sector banks and insurance companies to Adani group of companies that “the Life Insurance Corporation of India (LIC) has informed that its debt exposure to Adani Group of Companies, as per annexed details, was Rs 6,347.32 crore and ₹6,182.64 crore, as on 31.12.2022 and 5.3.2023, respectively.”
She added that “the five Public Sector General Insurance companies have informed that these companies do not have loan/credit exposure to Adani Group of Companies.”
On the question of risk of exposure to these companies, she stated that “as per inputs received from RBI, in order to protect banks from risk, it has implemented large exposure framework which limits the exposures that a bank can take to a single counterparty and a group of connected counterparties to 20 per cent (extendable to 25 per cent by the Board of the bank under exceptional circumstances) and 25 per cent, respectively, of the eligible capital base of the bank.”