In recent days, when Adani group has become the “talk of the country” for whatever reasons, the criticism against Adani group has been mostly levelled by financial researchers, credit rating agencies, economists and a section of politicians. It is conspicuous that the performance and contribution of Adani group to the technological and industrial growth of India has not been highlighted or has been largely ignored by the critics while voicing criticisms.
There is no doubt that the growth of Adani group during the last one or two decades have been spectacular. Normally, this sort of growth should be admired, particularly when such growth has happened in industrial and infrastructure sectors and not by mere money manipulation or playing in share market.
One would be fairer in discussing about the Adani group if it would be realized that such growth has happened due to bold and heavy investment in the economically vital and much-needed growth-oriented sector such as solar energy, mining, port development, airport management, power transmission, road construction etc. Obviously, Adani growth has happened in tune with the growth in sectors, where Adani has invested.
Infrastructure projects – A calculated risk:
It is well known that ventures in infrastructure projects have certain elements of risk in view of the high investment involved, possibility of cost escalation, long gestation period, low margin and possible shifting of government priorities and policies from time to time with regard to development plans. In such circumstances, there are not many project promoters who would like to dip their hands in infrastructure projects. Until recent years, with the private sector largely hesitant to invest in infrastructure projects, governments have to invest and manage such projects.
In recent years, with the development of concept that the government is to govern and not to do business, the governments have been looking up to private sector to venture into infrastructure projects and government policies have been redesigned accordingly.
In such a scenario, Adani group has entered into ventures in infrastructure projects with rare courage of conviction and certain level of responsibility to contribute to the national development programme.
It is sad that due credit has not been given to Adani group by critics for such proactive and dynamic approach.
Wherever Adani group has been given contracts by the government for such projects, Adani group has participated in the tender in the competitive bidding process and have won the bids. These are all transparent activities.
Given the nature of the infrastructure projects, large finances are required and Adani group has preferred debt to rise these finances, with free-floating shares of its listed companies that are available for trading and trading being a small proportion of the total.
The critics allege that Adani group floated shell companies, claiming to be independent, to part finance in tax havens abroad that was then used to acquire the shares of Adani firms. The critics call it as share manipulation.
One of the so-called tax havens mentioned was Mauritius. However, Mauritius government has now clearly said that it has reviewed the allegations made by US-based short seller against the Adani group and has not found any breach of regulations in the country by Adani group.
While allegations have been made, nothing has really been proved, even while Adani group has strongly denied all the allegations.
What is happening here is that Adani is facing media trial and the US-based short seller must have been laughing up its sleeve that its’ vague allegations have become such a huge topic for national debate in India.
Another allegation is that the Government of India has been supporting Adani group.
Per se, there is nothing wrong or unusual in this, as the task of the government is to support investors in industrial promotional activities.
When Tata group has placed an order for Airbus from France and Boeing from USA, the Presidents of France and US expressed their happiness. This is as it should be, as leaders of the government must involve themselves in promoting projects and supporting project promoters from their country. This should be so in India also and Government of India supporting an industrial group from India is certainly appropriate. Certainly, every industrial group in India do expect such support, which Government of India is extending.
So long as Adani group has functioned within the framework of laws and whatever methods adopted by it to raise finance are as per the terms of law, Adani group need to be recognized for its positive contribution, instead of mudslinging.
Those who have been observing the performance of Adani group on the ground would tend to agree with the claims of the Adani group that it’s fundamental strength lies in mega-scale infrastructure projects, execution capabilities, organisational development and O&M management, which are of global standard. The institutions who have invested in Adani group or extended loans do not seem to be worried and this is more than clear from the fact that the Rs.20000 crore FPO was fully subscribed on the due date.
The only people who seem to be “worried” are the critics and section of media and politicians, who are not the stake holders. They are only observers.
The role of Watchdogs and laws in India:
Unfortunately, SEBI, the watchdog in India, has been vague in putting forth it’s comments on Adani episode, which has created media speculation. Many have developed suspicion as to whether SEBI has discharged it’s responsibilities as a watchdog adequately well.
Obviously, one gets an impression that India’s framework of laws is not adequate for SEBI to act as a true watchdog.
If India had such well planned and adequate framework, a regulator like SEBI could have given it’s verdict within a few days to debunk the report, India as a country is unable to do so because Indian laws are archaic and enforcement mechanisms too slow.
In any other country, Adani could have taken such short sellers to court and sued them for damages. Adani is unable to do that because of the problems of the Indian legal system.
Supreme Court of India thought it fit to entertain a case about the Adani episode created by US based agency, which is surprising and create confusion about laws and regulations in India and jurisdiction of court in such matters.
However, India has an opportunity to strengthen our governance and enforcement framework so as to ensure such strong players remain strong and more emerge.