Unravelling Adani saga, its larger implications

Few stories have captured more headlines in India this year than the saga of Gautam Adani and the Adani Group. In January, Adani and his companies were accused of stock manipulation by New York-based investment firm Hindenburg Research. This sent Adani Group stocks plummeting while Adani’s own net worth took a nosedive. Today, the group is trying to calm investors and strengthen its balance sheets even as both the Supreme Court and India’s securities regulator are investing possible wrongdoing.

To discuss the larger implications of this affair, veteran financial journalist Menaka Doshi joined host Milan Vaishnav on Grand Tamasha, a weekly podcast co-produced by the Carnegie Endowment for International Peace and the Hindustan Times. Doshi is a Senior Editor at Bloomberg News and previously served as managing editor of BloombergQuint and executive editor of CNBC-TV18.

On the podcast, Doshi explained just how central Adani is to India’s infrastructure build-out.

“[Adani’s] port business—which is by far the most significant, most important commercially and strategically from a macroeconomy point of view—has 13 ports, 518 million metric tons capacity, servicing about 25 to 30 percent of the country’s port capacity,” she noted. “Recently, he added on eight airports to that; they will serve over one fifth of India’s passenger base. This group houses a company that is the largest private sector city gas player. It is the largest private sector train operator, with 66 freight trains.”

But she acknowledged that there are legitimate questions to be raised about the Adani Group’s transparency vis-à-vis the investor community. “We know for a fact that when the Adani group purchased a very large cement asset in the last few months, the actual acquiring companies were Vinod Adani’s companies but the business is said to be acquired by the Adani Group,” noted Doshi. “If you don’t explain how and why in sufficient detail, investors are going to remain concerned or confused. In this case, it is a particularly good asset and so, therefore, there hasn’t been as much blowback around the ownership structure. But the moment a Hindenburg report situation occurs, then these questions come back to haunt you as a promoter,” she remarked.

One of the biggest political issues to surface from the Adani affair is the matter of crony capitalism. On this, Doshi remarked, “It is very fair to examine relationships between entrepreneurs and politicians to see if any undue advantages have been handed out. Several veteran journalists have devoted years to tracking this so-called ‘relationship’ between Mr. Adani and Mr. Modi.” But she went on to note that these allegations are just that because nothing has been definitively established. Journalists have “alleged that rules were changed to facilitate the Adani Group, investigative agencies were sent after rivals of the Adani Group, that there were allegations of bid-rigging in coal import tenders. None of this has of yet been conclusively proven—or disproven—by any investigative agency.”