Prakash Kumar

An average individual with no financial acumen, believes a report of a short seller, Hindenburg based out of Wall Street more than a company which paid for his livelihood & bills w/out once questioning his/her integrity and loyalty.

Such is our system which believes in western propaganda at face value ahead of its own facts & figures. We have slavery enshrined in our DNA, which fails to acknowledge the possibility of divisive polity being played out by a struggling global economy against a largely stable India economy.
The ills of Adani as exposed by the short seller, has much larger implications than just exposing firm alleged fraud. It presents Indian, regulators in a very bad shape. In simple terms it states that Indian watchdogs had their eye shut who could not see a monumental scam being played out in front of their eyes. Even damning would be an admission that you were an equal accomplice to the malice if facts are proven true.
Adani on its part too is not playing it’s cards well. Instead of hiring a top attorney and stand it’s ground and defend its numbers, and fight back it appears to have caved in. By withdrawing its Rs 20k Crore FPO, it threw the white flag. In lay man terms this is being taken as an admission of guilt.
You expected Adani to stand up and fight. It is likely that at some stage Adani will fight back but then it might be too late as it will come at a price of colossal loss of market capitalization of the firm & serious dent to its investors networth.
In simple business and economics term debt is not bad, In fact too much debt is not bad either unless the debt has been secured through unfair means and/or if debt is at such unsustainable levels that it’s earning cannot support the debt. Regardless of company’s debt structure this is a financial decision taken by company’s board under full purview of regulatory watchdogs.
The only facet which needs to be investigated is whether or not hefty kickbacks were paid to banking honchos to secure these debts? This if true will make this alleged scam a replica of Harshad Mehta scam albeit at a larger scale.
There are also unclassified reports that this is just a trickery played by disgruntled Adani insiders and or those who have been bolted out of Adani for past misdemeanor or underperformance. This happens in loosely managed company with few checks and balances at the time of separation where too much of classified data is taken by those who are not supposed to have those data in first place. Such insiders becomes easy target for firms like Hindenburg to prepare a report.
Does this fiasco mean Adani is all clean. No it is not, what it means is that it calls for investigation. Let a bipartisan impartial enquiry be set up by Indian government possibly led by a SC judge to investigate facts and report the findings to a parliamentary Committee. For once let’s show that we have systems in place which brings out the truth in black and white w/out any shade of grey.
This step is important for proving tenacity, confidence and resilience of the “corporate India” success story. So it is important to play this storm out without internal bickering & name calling and taking undue political mileage of a situation brought upon by an overseas agent whose intention is yet to be proven.
One way to thwart any short seller or hedge fund take any undue advantage of collapsing price of Adani scripts would be to fast track investigation and carry out audits with speed. Till such time stop trading Adani stocks at the stock exchanges. This will be tough to implement because lot of investor money will get stuck but this has to be an important first step to bring about proprietary and transparency in the investigation.
Unfortunately your truly believe that in a divided country there is a big section of population which thinks Adani is a BJP stooge and a benefactor of Modi administration in Delhi. These political outfits smell this as an opportunity to torch Modi, an individual whom they have not even touched as it entails on much maligned issue of corruption in India. This is their god sent opportunity to lift themselves out of a proverbial nadir & rebuilt their political fortunes which is in a mess. It is more likely that this section of voice will deliver the guilty verdict san, any trial and that will give more cannon fodder to divisive overseas voices.
Last but not the least is this a game being played out to win the rat race of richest India, Asian, Global promoter? It could be – these days fortunes of individuals is getting linked to their company’s stock prices and it is very much possible that #2 or #3 or what we can use this as a technique to leapfrog an individual by the name of Gautam Adani whom many thought became too rich too soon! Once you are alone sitting on the perch, there is always the possibility of being pulled down! Such is the competitive nature a human mind is programmed into!
While it is important for truth to come out, it might also be important to work out the expense (both qualitative and quantitative) at which it will come out.
Note: Author has not even Re 1/- worth of stock or position in any Adani firms and views are out of his personal assessment with now documentary evidences. The views are personal only just to gyrate the thought process.