All Adani Group stocks ended lower with cuts of 3-8 percent on February 13 following multiple developments in the Adani vs Hindenburg saga during the day.

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SEBI probing US short-seller allegations on Adani

Adani Ports and Ambuja Cements were over the weekend moved out of the ASM framework while Adani Enterprises continued to remain under it. On Monday, markets regulator The Securities and Exchange Board of India (SEBI) told India's Supreme Court that it was inquiring into the allegations made against the Adani Group of companies by the US short-seller.

SEBI said it was inquiring into market activity immediately before and after Hindenburg Research published its report that accused the group of improper use of offshore tax havens and stock manipulation.

(NSE's Additional Surveillance Measure framework, under which Adani Enterprises, Adani Ports and Ambuja Cements were placed, is an additional surveillance initiative by the Exchanges and the SEBI to enhance market integrity and safeguard the interest of investors.)

Has Adani Group lowered revenue growth target?

A Bloomberg report citing people familiar with the matter claims that the conglomerate has cut its revenue growth target in half and plans to postpone new capital expenditure in the aftermath of a bruising short seller attack.

Following the report, the Adani Group on February 13 released a statement saying that the balance sheet of each of its independent portfolio companies is very healthy. It said, "We have industry-leading development capabilities, strong corporate governance, secure assets, strong cashflows, and our business plan is fully funded."

Three Adani group firms pledge additional shares of SBI

On February 11, Adani Group pledged additional shares in favour of SBICAP Trustee. In an exclusive interview with CNBC-TV18, Swaminathan J, MD Corporate Banking and Subsidiaries at SBI said the group companies are required to maintain 140 percent collateral security coverage as per one of the covenants relating to an existing loan and hence the top up.

This development came after Adani Ports and Special Economic Zone (APSEZ), Adani Transmission Ltd and Adani Green Energy pledged shares to SBICAP Trustee Company, a unit of India's biggest lender, SBI over the weekend.

Swaminathan J, however, clarified that this was not a new loan granted against pledge of shares but a top up of collateral to maintain covenants relating to existing loan to the Gautam Adani-led group.

Govt says enough safeguards in place for investor protection

Separately, the government today assured the Supreme Court that the current framework for investor protection is “fully equipped” to deal with shocks such as the crash in Adani stock prices. In the same breath, the government has also expressed concern that any expert panel to review the existing framework may send adverse signals to global investors.

Solicitor General Tushar Meta appeared on behalf of the Govt before the CJI Justice Chandrachud led bench of SC. He was responding to issues raised by the Supreme Court in the Feb 10 hearing. On Feb 10, SC had red flagged “lakhs of crores” of investor wealth being wiped out post the Hindenburg Report on the Adani Group.

SEBI submits affidavit in Supreme Court

SEBI has submitted an affidavit in top court saying dealing with such unusual events at a specific Group is a matter of surveillance and enforcement action, if necessary.

SEBI and the stock exchanges will undertake detailed examination as per existing regulatory framework, it said, adding that the current framework in place for investor protection is robust, validated not just in recent weeks but also through pandemic.

For short selling, robust frameworks are in place, which get automatically triggered and disclosed to the public, it said, adding that guardrails in the form of ASM became repeatedly applicable to the shares, when prices were going up and going down.

Moody's cuts outlook on 4 Adani Group entities

Another development on February 10 that may have triggered the downward movement in Adani Group stocks is that Moody’s Investors Service downgraded its rating outlook on four Adani Group entities — Adani Green Energy, Adani Green Restricted Group, Adani Transmission and Adani Electricity — to 'negative' from 'stable'. On four other firms, it maintained a stable outlook.

The action comes on the back of a significant and rapid decline in the market value of Adani Group companies, the global brokerage said.

Public sector general insurers' exposure to Adani Group firms

The Ministry of Finance informed the Parliament on Monday that the total exposure of five public sector general insurance companies under Adani Group companies is Rs. 347.6 crore, which is 0.14 percent of the total assets under management (AUM) of these firms.

"As per data received from Public Sector General Insurance companies, namely New India Assurance Company Limited, United India Insurance Company Limited, National Insurance Company Limited, Oriental Insurance Company Limited and General Insurance Corporation of India, total exposure in Adani Group of Companies as on January 31, 2023 is Rs 347.64 crore," the parliament was informed.

The ministry said that LIC’s exposure was less than a percent of the LIC’s total AUM.

What is the Adani vs Hindenburg issue?

The slew of developments follow the Hindenburg Research report released in January 2023 that alleges the Adani Group "engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades". The disclosure sparked a $51-billion sell-off in shares of the group companies over two trading sessions.

The Adani group rubbished the charges and termed the report as a "malicious combination of selective misinformation and stale, baseless and discredited allegations".

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First Published:Feb 13, 2023 9:53 AM IST