Closure Of Hindenburg Research Body Must Be A Relief To The Adani Group

Hindenburg came under limelight in India after it published reports on the rising Adani Group of companies, observing that the conglomerate was burdened with huge loans which have not been properly provided for in its balance sheets. There were other allegations like Adani's involvement in bribing government officials for getting crucial government clearances and contracts.

Taking up the Hindenburg cue, the US authorities had instituted enquiries into the affairs of the Adani Group as the Indian conglomerate had raised funds in the US. The US authorities had gone to the extent of issuing arrest orders on Gautam Adani his nephew. The Adani Group had sought to reclaim the situation by repaying some of the US funds.

Nevertheless, despite rearguard actions, the Hindenburg reports had wiped out massive value from the market capitalisation of Adani Group companies. While before the report was made public, Gautam Adani, the principal promoter of the group was adjudged one of the richest persons in the world of wealth, ahead of Mukesh Ambani, the publication of the reports eroded his wealth so much that he had slipped down.

Following the publication of Hindenburg reports on Adani group, the shares of group companies crashed and investors had lost large sums on their equity holding. However, subsequently the share prices have recovered though to the full extent.

Meanwhile, Hindenburg had done what is known as“short selling”, that is, when an investor expected price of a share to fall and thus sells in expectations of a price fall. These investors are called“short sellers” or investors who take a“bearish” position.

Hindenburg's report on the Adani Group has resulted exactly this kind of situation and ordinary investors had suffered a lot. However, the research firm had come under enquiries in the United States as well as the Indian Securities and Exchange Board of India -better known as SEBI- also started enquiries.

Adani shares aside, the research firm had published similar reports on a number of other companies as well. The US securities oversight body, Securities and Exchange Commission (SEC) - had also started investigations into the firm's practices and market manipulations through its reports.

Possibly, under pressure from all these investigations and in anticipation further disclosures, the firm decided to discontinue its operations. Hindenburg was also under the lens regarding its links with hugely embroiled currency trader, George Soros.

As the Hindenburg closure reports streamed in, there was jubilation among Adani Group employees and investors. Some had even mentioned that the Adani Group's position of invincibility was vindicated. However, Congress spokesperson, Jairam Ramesh, had taken up on himself to emphasise that this did not meant a“clean chit” for the Adani Group. The Group is facing many allegations in the Indian market. Some are being investigated by the SEBI.

The government of Indi and its investigating agencies must do a proper job in ensuring that the Adani group companies follow the market principles and do not manipulate the prices of the stocks to hike its market capitalization. Indian people get influenced by the reports of the foreign agencies as they have doubts about the impartial functioning of the Indian agencies like SEBI. That should go. The Narendra Modi government has to ensure that the Adani group gets the same treatment from its regulatory agencies like any other Indian company. No preferences. (IPA Service )

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