Those who pooh-poohed the Hindenburg Research report that made a litany of allegations against the Adani Group, including chairman Gautam Adani himself did not, perhaps, realise how damaging it was. If they thought that it could be countered by brouhaha, they have been proved wrong. It seems the report was aimed at scuttling the Rs 20,000-crore Follow on Public Offer announced by Adani Enterprises. Of course, there was an attempt to save the FPO using institutional buyers willing to take certain risks to help the Adani Enterprises. In retrospect, the more sensible step would have been to postpone the FPO till the concerns expressed by Hindenburg Research were met. What the group could not contemplate was the beating on the bourses that Adani Enterprises suffered. In fact, the share prices of all the Adani companies have been falling.
The calling off of the FPO issue does not seem to have achieved the target of boosting the investors’ confidence. The promise that all the money invested in response to the FPO call would be returned does not seem to have made any difference. Often, the devil is in the details. Non-institutional investors put in bids for over three times the 96.16 lakh shares reserved for them. Similarly, 1.28 crore shares reserved for qualified institutional buyers were almost fully subscribed. There was, however, a muted response from retail investors and company employees. For instance, only 11% of the 2.29 crore shares earmarked for retail investors were picked up. Similarly, the employees sought only 52% of the total 1.6 lakh shares reserved for them. In other words, it was a flop show forcing the company to withdraw the offer.
Of course, the ranking of the company has been hit hard. And so has the personal fortune of Gautam Adani, who is no longer India’s — and therefore Asia’s — richest person. Those who run the company know that such rankings are just psychological. It adds to the feel-good factor prevalent in the company and has no impact on the balance sheet. Looking back, one reason why the Adani Group exposed itself to such an attack from Hindenburg Research and why it gained traction, despite the voluminous response, is that there was something extraordinary with the kind of growth rate the Adani companies have been registering. The group was not known much beyond Gujarat till 2014. Since then, there has been no going back with the group successfully bidding for airports and seaports. While the whole country was suffering with tens of millions losing their livelihood during the Covid-19 period, the group had been growing at a phenomenal rate, raising eyebrows. How could it overtake other established companies and become so successful in so short a time? Of course, those who know how shares are floated and picked up using tax havens knew that there was something amiss in the whole thing. After all, as the saying goes, “behind every great fortune, there is a crime”.
It is too early to give a clean chit to either the Adani Group, which is alleged to have indulged in scandalous behaviour, or Hindenburg Research which allegedly exposed it. While the hit job is successful, what was the company’s motive in targeting Adani? Equally important is why the group could not restore its image as the quickest growing entity for which only the sky was the limit. That a large section of Adani’s own employees were not willing to invest in the FPO was a telling commentary on the trust deficit that the group suffers from. It is a large group with considerable stake in India’s infrastructural growth and it is in the country’s interest that it should survive to complete the projects on hand. In order to serve this purpose, the group should answer all the questions raised in the public domain. Government institutions that monitor tax violations and the use of shell companies are also duty bound to answer.
