Adanigiri

Over the past few decades, India’s growth trajectory and the relationship between the state and private capital has shared traits with Latin America of the 1980s and Russia of the 1990s. For one, an ad-hoc pro-business policy has allowed a few companies to monopolise asset ownership. Second, there has been rent-seeking behaviour – adding wealth without contributing to productivity – at the top with the support of the government while cutting down on competition and the entry of new firms across sectors.

https://scroll.in/article/1043134/what-the-rise-and-fall-of-adani-stocks-says-about-the-indian-state-and-private-capital 

Political economist Atul Kohli, in his work on the politics of economic growth in India between 1980 and 2005, had a detailed insight on the dynamics of the political economy that shaped the growth trajectory during that period. According to Kohli, India’s entry to the global economic landscape in the 1990s was a result of incremental, gradual reforms of the 1980s based on shifts in the relationship between state and private business.According to Kohli, the economic reforms of this period – undertaken more on the capital market side – allowed Indian markets to operate more flexibly in certain sectors (telecom, automobiles, aviation, information technology, construction, consumer goods, among them) with the aim of bringing in private investment opportunities.

From this period, India saw a strengthening of the “state-capital-private business” alliance, often at the cost of the social and economic protection to India’s deeply fragmented labour force.

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by Deepanshu Mohan

03/02/2023

https://scroll.in/article/1042918/like-jallianwala-bagh-how-adani-is-invoking-nationalism-to-counter-allegations-of-corruption 

On January 24, Hindenburg Research made wide-ranging allegations that the Adani Group was pulling off the “largest con in corporate history”. It claimed that the conglomerate has over the decades been involved in stock manipulation, accounting fraud, used offshore shells for money laundering and siphoned money from listed companies.

A day after the report’s publication, Adani Group’s chief financial officer Jugeshinder Singh pushed back against Hindenburg’s allegations in a video statement with the Indian flag in the background.

In another statement on Thursday, the Adani Group had framed the Hindenburg report as having harmed Indians. “The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” the group said.

On Sunday, in a 413-page response to these allegations of illicit financial activities, the Adani Group instead argued that it was involved in “nation building” and suggested that Hindenburg was deliberately targeting India. “This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” the Adani response read.

by Nachiket Deuskar

31/01/2023

The report alleges that the stock values of the Adani Group and thus its ability to raise debt and leverage has been wildly inflated. A valuation of the group at levels more typical of the market and the sectors that it is in, would imply a spectacular devaluation.

The Hindenburg report traces the mechanisms and personal networks through which stock values have been boosted by a group of circular, inside equity stakes:

Unsurprisingly, the opposition Congress party has leapt on the Adani issue. As The Print reports, Party leader Jairam Ramesh has issued a statement.

“State-owned banks have lent twice as much to the Adani group as private banks, with 40 per cent of their lending being done by SBI,” Ramesh said. “This irresponsibility has exposed the crores of Indians who have poured their savings into LIC and SBI to financial risk.”

Congress’s standing is so weak that it is unlikely to pose a real threat. A more serious risk is that the panic spreads from Adani throughout the financial markets, forcing the Modi administration to make painful choices. As Bloomberg reports the shock and anxiety is catching especially amongst global investors who may swiftly reevaluate their weighting of Indian assets.

“The issues strike at the heart of the Indian corporate sector scene where a number of family-controlled conglomerates dominate,” said Gary Dugan, chief executive officer of the Global CIO Office. “By their very nature they are opaque, and global investors have to take on trust the issues of corporate governance.” “After last year’s stellar performance, Indian equities and any high-profile company’s shares are open to downside risk of profit-taking,

by Adam Tooze

30/01/2023

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With Hindenburg, Adani Faces His Stiffest Challenge Yet https://thewire.in/business/with-hindenburg-adani-faces-his-stiffest-challenge-yet
What does the short-seller’s report mean for Adani’s plans to grow through international bonds?

With growth, the group’s borrowing strategy has changed. By 2019, it had begun looking beyond domestic banks, tapping funds from overseas, mostly in the form of bonds, instead....

As Bloomberg columnist Andy Mukherjee wrote: “If Hindenburg is right, then a network of shadowy operators… is exerting outsize influence over India’s markets from overseas in cahoots with corporate honchos back home.”

This process has gone unchallenged by India’s regulators. This abdication in duty is seen in other parts of India’s capital markets architecture as well. Take the now-disgraced Brickwork Ratings. It normalised Adani’s use of borrowed funds as equity...

Weak regulation has allowed Adani to grow unchecked. But now, poor regulators – and the company’s own decisions – have also created room for the entry of a short-seller who thinks the company’s shares are overvalued by 85%.

https://scroll.in/article/923095/from-2014-to-2019-how-the-adani-groups-footprint-expanded-across-india In September and October 2018, the Modi government awarded 126 contracts to firms to set up and operate piped natural gas networks and fuel stations across India. These bids were notable for three reasons. First, the number of contracts given out in these two months was significantly higher than those given in the previous nine years – 35 contracts under the Congress-led United Progressive Alliance government, and 63 contracts under the Modi government until then. Second, the government put these contracts up for bidding even though the networks for transporting gas to these cities and districts are still not in place. ... These gas contracts are part of a larger pattern of growth for the Gautam Adani-led infrastructure conglomerate. One part of the expansion has come through acquisitions.