[extreme_torque]

Just a reminder, this is the same research firm who brought down Nikola which I knew was a fraud all along. Its highly dissappointing and damning in the same measure that this report has come from a research firm outside of the country. Where is our financial media? It was a rhetorical question, we already know why.

[Shreyans_Jain]

Originally Posted by ashis89

Some of us had similar opinion about Bitcoins and other crypto currency. And some of us chose to ride the wave. End results were the same as you have predicted. However in case of Adani stocks, unknown/clueless participants of this game, who have mutual funds or pension funds, might also end up burning their fingers.

You just cannot compare Adani with crypto. Everyone knew crytpo was 100% speculative and unregulated. Bankers, institutions and media shouted the same. Here, we are talking about public listed companies with corporate laws, regulations, oversight and independent governance and regulatory bodies. The only way this entire infrastructure fails together is if it deliberately looks the other way.

[whitewing]

Originally Posted by extreme_torque

...Its highly dissappointing and damning in the same measure that this report has come from a research firm outside of the country. Where is our financial media? It was a rhetorical question, we already know why.

There is a reason for that. Even journalists who respect their craft would fear for their life and limb. Quoting from the report

The Adani Group started a series of libel actions in 2017, which could see a leading Indian investigative journalist jailed In response to a series of articles about alleged tax evasion by the Adani Group, including the import-export of diamonds, and irregularities in the creation of tax-free Special Economic Zones.

And in August 2021, the Adani Group launched a defamation action against India´s Economic Times after the newspaper reported that authorities had frozen the accounts of a handful of Mauritius-based investment funds holding almost exclusively Adani stocks.
According to campaign group AdaniWatch, the journalists in that case were ordered to appear at a remote courthouse in Adani´s home state Gujarat.

This also reminds me the case of the analyst -Nitin Mangal - who broke the indiabulls story (it wasn't reporting, but an analyst report) and the guy was hounded and imprisoned.

An entity outside of India is best placed to say that the emperor has no clothes.

[V.Narayan]

Keeping forum rules in mind I’ll stay out of any discussion that smells of politics. I wonder if some members went through the whole report. I did. Here is my take from a neutral point of view and keeping politics, emotions & moralistic tones out of the picture. Please do not assume my personal stand on this from this post:-

The key point from a strictly financial perspective is their debt over hang. As of March 2022 it was a net debt of Rs 197,444 crores or about US$ 26 billion. This against a revenue of ~US$23 billion over half of which is linked to coal & power generation. The market has known this for a long time. In a single sentence what Hindenburg is stating is that the Group manipulated its own stock price to inflate it and use that inflated price to raise more debt to invest in growth.

Hindenburg is a respected US research organization that has in a way specialized in unearthing a can of worms many times before. But they are not God though the media likes to believe they are. I won't be surprised if investors whom Hindenburg advises are making money {or hoping to} by short selling Adani stocks two days before this report was made public! Nothing is black and white. No one is bathed in milk. However to their credit their reports are very well researched so I wouldn’t discount the core of their allegations. I suspect there will be a sequel to this report addressing some of those 88 questions they have asked.

Some of the allegations don't really matter – shell companies, routing via Mauritius, nominee directors etc because the law allows for these to encourage flow of FDI into the Indian economy. These are perfectly legitimate things that are used as buzz words by journalists too lazy to read and learn. The report has an overdose of these 'trigger phrases'. Some other allegations of elbowing out competition are because of the sheer political heft of this group which is a well known non-secret!! Everyone in the market already knows those cases, unfair as they might be.

The key point from a strictly financial point of view is their debt and the allegation of stock price fiddling and using that inflated price to raise more debt. In April 2021 their market cap crossed $100 bn becoming the third Indian group after Reliance and Tata to achieve that. Given the size and time frame that itself is cause for raised eyebrows. But in April 2022 they crossed $200 billion! That is even more surprising because earnings did not grow proportionately. And 7 months later they crossed $280 bn and got ahead of the Tata group in market cap!!!. It is this meteoric rise that has triggered suspicion and very justified concern.

Now let’s look at the flip side. For all their faults they have invested heavily into core infrastructure in ports, power, mining and lately airports that the economy needs. This is unlike many in private equity who prefer e-commerce aggregators and home delivery businesses. Adani are the largest private producer of power, largest private transmission provider for power, run two of the largest and most efficient ports, the largest solar plant in the world and run Bombay airport amongst 6 others. And are now making very significant investments in rail infra, oil exploration and solar cells manufacture. To their credit they brought world class and world scale infrastructure to India and most of us are consumers of that power and airports and seaports!

They are operating off the Dhirubhai Ambani playbook ditto in fast forward mode. They will use this report as a warning sign and tweak their debt:equity ratios and move on. They are at a size where they will matter regardless of which Govt is in power. I'm not getting into right or wrong here just placing the facts. Each of us can draw our own conclusions.

[condor]

Originally Posted by V.Narayan

They are at a size where they will matter regardless of which Govt is in power.

@Narayan sir, Thank you for this un-biased analysis. The only two points I would like to add is that Adani group was not formed in 2014, but has been around for a long time before 2014. Second, in the past few years, there has been a big push for infrastructure development, and Adani group has taken the opportunities in some of this.

I don't have the understanding to comment on the finances part, but I hope that the infra projects they have taken up completed as required, of the required quality, and on time.

[Shreyans_Jain]

Originally Posted by V.Narayan

They are at a size where they will matter regardless of which Govt is in power.

This, right here, is the crux of the matter. They have become too big to fail, there will be too much collateral damage if the bubble is allowed to burst. But that doesn’t make the basic issue go away. Why are our regulatory agencies choosing to sleep on this? This is an Indian company playing loose with the money of the Indian public. The sheer scale of it dwarfs Satyam Computers and ilk. They way they have acquired a lot of their infrastructure assets is very controversial in itself. This is India’s Lehman Brothers waiting to happen.

Nobody is ever too big to fail, people are just too inconvenient to be allowed to fail.

[extreme_torque]

Originally Posted by V.Narayan

Keeping forum rules in mind I’ll stay out of any discussion that smells of politics. I wonder if some members went through the whole report. I did. Here is my take from a neutral point of view and keeping politics, emotions & moralistic tones out of the picture. Please do not assume my personal stand on this from this post....

I think the report itself has pretty much distilled all the objections via 88 odd questions at the end. There arent just one or two issues, there are multiple issues of varying level of seriousness.

One of the most egregious is the valuations which in some cases have a forward P/E rations of 831x. As an example - Apple, one of the most innovative tech company on the planet, and an industry which usually have higher P/E's, their P/E is at 23.3x as of today. The company has then used these valuations to take even more debt. And then on top, 4 out of 7 of these entities have negative free cash flow.



I can write more but I guess its better for the people to go through the report itself rather than me basically re-writing the report here.

[VRSriram]

Everything published in this report is not a revelation as these are public information already known. Timing of the report is to disrupt FPO. Those shorting Adani need to just revisit history to know what happened when Dhirubai trapped the short sellers. Reliance group Financials at that time and even now is well known. Moreover the execution capabilities of Adani none can match and they have created vast infrastructure assets. Their bloated debt is well known but so are the operating cash flows. They are on the process of deleveraging. Also they have become too big to fail irrespective of the party in power. There does not seem to be any major difference between Reliance of yesteryear and Adani now.

[ashis89]

Originally Posted by Shreyans_Jain

You just cannot compare Adani with crypto. Everyone knew crytpo was 100% speculative and unregulated. Bankers, institutions and media shouted the same. Here, we are talking about public listed companies with corporate laws, regulations, oversight and independent governance and regulatory bodies. The only way this entire infrastructure fails together is if it deliberately looks the other way.

You are talking about regulations which I don't deny. If the allegations are true, then it's a fraud of massive scale. I was talking of the profit seekers/small retail investors who are riding the stock wave but could crash badly.

PS: I owned a small bunch of Yes Bank shares a few years ago and I still do.

[kiku007]

22-Jan-23:
Someone starts a thread (Why I spent Rs 40,000 on Sunfilm at Speedfreaks, Chennai) about installing sunfilm in his personal car. People point out the technicality that it is illegal and he should watch out and be wary of the cops tearing the sunfilm. His car, his money, tropical/sunny Chennai but he's gotta abide by the laws of the country hey?

26-Jan-23: Republic day in the country with the largest population.
Someone starts a thread about alleged con/financial misconduct by the world's 3rd richest person. I just smile and remind myself that the long arm of the law will only question the person who installed the sunfilm and won't move one inch to investigate the alleged con. Apparently he's building infrastructure. Sure yeah, because no one else could have I guess.

Long live democracy.

[extreme_torque]

Originally Posted by VRSriram

Also they have become too big to fail irrespective of the party in power. There does not seem to be any major difference between Reliance of yesteryear and Adani now.

They became this big because of the party in power. The rise since 2014 has been meteoric and now we know why (although we already did in someway)


And I am not sure what do you mean by too big to fail? So what if a rabid crony fails? As a tax payer it can only be good for us unless you mean we would have to bail him out to which my question would be, why? Are we going to affix reponsbility for the mess we are in?

Originally Posted by kiku007

22-Jan-23:
26-Jan-23: Republic day in the country with the largest population.
Someone starts a thread about alleged con/financial misconduct by the world's 3rd richest person. I just smile and remind myself that the long arm of the law will only question the person who installed the sunfilm and won't move one inch to investigate the alleged con. Apparently he's building infrastructure. Sure yeah, because no one else couldn't.

Investigate willfull ignorance or worse collusion. You are expecting a bit too much.

[padmrajravi]

Adani's failure at this point will affect all our PSU banks. Adani's loan account in SBI only will be more than 10k crore. Eventually, the taxpayers will lose out whether he succeeds or fails. It is a cycle. Get the government on your side, borrow money from PSU banks with that support ( because you will win the tenders for all infra projects), use that to inflate stock prices, use the inflated stock price to borrow more, and then suddenly, it is too big to fail. Of course, some of this money plays a part in ensuring that the support system stays in power through democratic means. If it fails, nationalized banks have to write off loans as nonperforming assets, which will trigger a financial collapse. The government will then have to rescue the PSU banks with taxpayer money.

[Shreyans_Jain]

Originally Posted by padmrajravi

Of course, some of this money plays a part in ensuring that the support system stays in power through democratic means. If it fails, nationalized banks have to write off loans as nonperforming assets, which will trigger a financial collapse. The government will then have to rescue the PSU banks with taxpayer money.

The amount of bad loans that the government has already written off over the past 5-6 years is astounding. It is more than 11 lakh crores. All this has happened silently and stealthy, without any noise being made in the media. Ultimately, it’s the taxpayer, you and me, who is bankrolling all this.

To put things into prospective, INS Vikrant cost us 23000crores. The entire Rafale deal cost us 59k crores. Our entire defence budget for a year is a little more than 5lakh crores. This is 11 lakh crores that we have simply written off.

https://wap.business-standard.com/ar...2000581_1.html

[deetee]

Don't worry too much, the system will not collapse suddenly. There can be lot of discussion while the issue is hot but there is sometime before the collapse comes. All these are early warnings. In the meantime, if anyone has any investments that can get affected, plan your exits.

We , as a normal person, can't control what syndicates do . But we can choose how we get affected by that. These scams have been happening since many decades, and will continue to happen. We all will forget this when the next big worry comes . The cycle will repeat. Bottom line is to do what it takes to survive the chaos.

[trippytragopan]

Originally Posted by Ford5

The previous attempt to expose by an Australian media firm who had sensitive info about this same company was muzzled quite badly. I have faith Nationalism will again save the day!

The Adani Group has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated U.S. $17 billion.
https://twitter.com/HindenburgRes/st...P0do-Asug&s=19

NDTV has not published a single article or posted a tweet on this case.