Adani’s financial scams puts Modi at high risk

Gautam Adani and Modi trusted duo

Asifiqbal Thakoor: School dropout Gautam Adani has become Asia’s richest man. But with what happened last week, the Indian national faced the biggest challenge of his business career so far.
It’s been a rollercoaster week for one of the world’s richest men. He saw his personal fortune of nearly $25 billion disappear before his eyes.
The 60-year-old Indian businessman has become Asia’s richest man and the world’s third-richest person as the share price of his various companies has risen tenfold in the past three years.
But this week, after a controversial report by New York-based firm Hindenburg Research came out, the share prices of various companies owned by Gautam Adani collapsed.
He dropped from number 3 to number seven on the Forbes list of the richest. Adani’s wealth has not only dwindled, its business model has been questioned, its reputation has taken a major hit. News from Reuters and New York Times.
US-based investment research firm Hindenburg Research published a research report on Adani Group’s stock market fraud last Tuesday. After the publication of that research report, the share price of Adani companies started to fall significantly.
Gautam Adani started out as a consumer goods trader in the western Indian state of Gujarat. Indian Prime Minister Narendra Modi also rose to politics from the same state. Opponents have long said that Adani and Modi have had a cooperative relationship in business and politics for years.
In no time, Adani’s business empire grew rapidly and his wealth blossomed. But from the beginning, Adani aimed to build a business empire. For this, starting from seaports and airports, he invested in the sectors of power generation, mining, edible oil, renewable energy etc. India’s richest man has also recently invested in media and cement sector.
Along with Adani’s business expansion, the share prices of its seven listed companies have also skyrocketed. Especially in the last three years, the share price of his companies has increased by more than one and a half thousand percent, it is said in various news. At this time, Adani also received a large amount of foreign investment.
Adani became the world’s third richest person in the Forbes list by building a mountain of wealth. Before him were Bernard Arnold and Elon Musk. At this time, his total assets stood at $127 billion. If calculated in Bangladeshi taka, its amount stands at Tk 12 lakh 70 thousand crore (taking 100 taka per dollar).
Despite his wealth, the 60-year-old Adani was at one time less well-known than other billionaires. Adani itself actively manages the business of all its branches. Now he has joined his two sons Karan and Jeet in the business. His wife Preeti Adani is a dentist.
Adani has always denied allegations that it has received business benefits due to its relationship with Indian Prime Minister Narendra Modi.
In a 2014 interview with Reuters, Adani said he had good relations with all sides of politics, but avoided politics himself. The Modi government has also denied giving benefits to Adani.
After Modi used Adani’s corporate jet, it was heavily criticized. Adani, however, said that Modi “paid in full”.
Recently Adani has focused on building its image. For this, he is giving interviews to various local and foreign media. It is also believed to be part of such activities by buying a majority stake in NDTV, one of India’s top media outlets.
Adani, who claims to be a shy person, credits the opposition as part of his popularity. Because, he got more popularity because of their continuous criticism.
‘People recognize Adani for Rahulji; Because, he has been targeting him since the 2014 elections,” he said about Congress leader Rahul Gandhi at an event earlier this month.
After three weeks, shares of Adani’s company collapsed on Friday. Just this week his companies have lost 48 billion dollars or 4 thousand 8 billion dollars in the stock market. Hindenburg Research says Adani’s businesses have misused tax holidays around the world. At the same time, the concern about Adani’s huge debt has also been highlighted by the research institute.
Adani’s share price has been falling after a release by US investment research firm Hindenburg Research. The US firm claims that the Adani group has a huge debt burden. Besides, they mentioned that there is also a problem in accounting. Apart from this, they claimed, Adani Group has been ‘engaged in unimaginable stock manipulation and accounting fraud for many years.’
A study by Hindenburg Research has highlighted fraud and stock market manipulation behind the extraordinary commercial rise of Adani, a Gujarati conglomerate close to Indian Prime Minister Narendra Modi. Due to the report published last Tuesday, the stock market of various companies of this group collapsed. Adani’s various share prices plummeted. Without the market their FPOs (listed companies without more shares in the market) tend to wash away. Rs 80 thousand crore disappeared from the market in two days.
State-owned companies Life Insurance Corporation of India (LIC) and State Bank of India, which invested in the Adani group, suffered huge losses.
Adani Group, however, termed the report as ‘baseless and ulterior motive’. But Hindenburg counter-challenged. They said in a statement, “If the report is really wrong, let the Adani Group file a case against us and prove it in court.” The Adani Group, however, said the Hindenburg Research report was false. And the US company is also adamant in their position.
Controversy, however, is nothing new for Adani. There have been protests by fishermen against his $90 crore port construction in Kerala, for which he has sued the state government and fishing community leaders. Environmentalists have long protested against its Carmichael coal mine in Australia.
Dilip Cherian, co-founder of consultancy firm Perfect Relations, known as India’s image guru, told Reuters that the Hindenburg report could pose a major risk to Adani’s reputation. But Adani can take steps to limit that loss and reassure investors in various ways.
But few would disagree that Adani’s meteoric rise has been a major setback.