Adani Group in Trouble?

The Adani Group is undeniably one of the prominent and successful trade and commerce conglomerates in Asia. The group has dipped its toe into every pool- from infrastructure to commodities to power generation to real estate and transmission, quite successfully. The chairman, Gautam Adani, as we all know, is a billionaire and has secured the 24th position on the Forbes list of billionaires in 2021. Adani has also acquired a whooping 74% stake in the Chhatrapati Shivaji Maharaj International Airport in Mumbai, which has the highest traffic all over India after the Indira Gandhi International Airport in Delhi. In addition to this, Gautam also has complete ownership of India's largest port- Mundra Port. Close observers of the Adani group will agree to the statement that the group has reached the pinnacle of success and prosperity. The fact that the price of one share of the business conglomerate plummeted to 1395.95 rupees from 169.95 rupees within a matter of a mere year acts as a testimonial to the group’s opulence.

However, recently, the whole world was shocked when Pankaj Chaudhary, the junior finance minister of India disclosed to the parliament that some of the firms which classify as a part of the Adani group were being investigated by the Securities and Board Exchange (SEBI), the body which monitors and regulates the commodity and securities market in India. Chaudhary went on to add that the Directorate of Revenue Intelligence which has been set up with the prominent motive of monitoring anti-smuggling, investigations and operations also had initiated an inquisition into the Adani group. Subsequently, this raised a lot of eyebrows, concerns and questions as people rushed to ponder behind the potential cause of this high-profile investigation.

Media reports published in June 2021 asserted that Mauritius based accounts of three funds; Albula Investment Fund., Cresta Fund., and APMS were frozen by the NSD (National Stock Depository). The predominant motive of this action was cited as ‘insufficient disclosures.’

Many sources also state that all the aforementioned trusts had a ‘significant exposure to Adani Group stocks.’ As expected, the trade empire consistently denied the report with strong endeavours but it was all futile.

What effect did this have on the Adani Group?

Subsequently and naturally, this suspicious and conspicuous report referred to earlier was enough to alert investors in the Adani group and they sold off major chunks of shares which ultimately led to a significant drop in Gautam Adani’s net worth. Consequent to the junior finance minister’s public statement, Adani Green Energy, Adani Total Gas and Adani Transmission witnessed a drop of 5% in share prices. Moving on, the share price of Adani Ports & Special Economic Zone declined by 2.6% whereas that of Flagship Adani Enterprises dropped down by 3.2%.

It has been confirmed that the investigation initiated by the DRI is connected to a ‘show-cause notice’ which had been issued to Adani Power in 2016. While Pankaj Chaudhary refrained from commenting on a question which speculated the possibility of scrutiny by the federal income tax department owing to legal rules, he stated the Enforcement Directorate (ED) – which has the responsibility of monitoring economic crimes and any breach of India’s laws related to money laundering, has no intention of investing the group

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