BENGALURU – Lawmakers of India’s main opposition party kicked off planned protests at some state-run companies on Monday over the crisis at the Adani Group, whose seven listed firms saw another sell-off that drove their market loss to US$112 billion (S$148 billion) in under two weeks.
Members of the Congress party plan to protest outside several offices of state-owned insurer Life Insurance Corporation (LIC) and the State Bank of India (SBI), both of which have exposure to Adani companies.
At one of the protest sites in Mumbai, people held up banners with the words “Save SBI”, television footage showed.
The crisis was triggered by United States-based short-seller Hindenburg Research’s Jan 24 report that accused the Adani Group of stock manipulation, unsustainable debt and use of tax havens.
The group, one of India’s top conglomerates, has rejected the criticism and denied wrongdoing in detailed rebuttals, but that has failed to arrest the fall in its shares.
In the brutal fallout of Hindenburg’s report, flagship company Adani Enterprises was forced to abandon a US$2.5 billion share sale last week. Group chairman Gautam Adani lost his crown as Asia’s richest person and slipped down the global rankings of the wealthy.
Mr Adani and Indian Prime Minister Narendra Modi are from the same state. Mr Adani has denied allegations by Mr Modi’s opponents that he had benefited from their close ties, and the Modi government has denied allegations of favouring Mr Adani.
As the Adani Group shares spiralled lower and cast a pall over Indian markets last week, lawmakers disrupted Parliament and demanded an inquiry.
Standard Chartered Bank, meanwhile, stopped accepting Adani bonds as collateral on margin loans, ET Now television channel reported. The lender has asked its private clients to top up their collateral for any shortfall, the report said.
The move follows similar actions by Citigroup’s wealth arm and Credit Suisse Group as Adani securities were roiled by Hindenburg’s allegations of fraud.
Bond holders of Adani Group firms are having initial conversations with financial advisers and lawyers to weigh their options after the unfolding crisis at the Indian conglomerate sent several dollar obligations into distressed territory.
Credit rating warnings
The stock market rout triggered a series of credit ratings warnings on Friday, with Moody’s saying the group may struggle to raise capital, and S&P cutting its outlook on two group companies.
Even attempts by regulators and the government to calm spooked investors do not appear to be working.
The Reserve Bank of India said on Friday that the country’s banking system remained resilient and stable. India’s market regulator said on Saturday that the country’s financial markets remained stable and continued to function in a transparent and efficient manner.
SBI said on Friday that it was not concerned about the exposure to the Adani Group, but further financing to its projects would be “evaluated on its own merit”.
Mr Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management, told Reuters on Friday that LIC shareholders and customers should not be concerned about its exposure to the Adani Group.
LIC has a 4.23 per cent equity stake in Adani Enterprises, while its other exposures include a 9.14 per cent stake in Adani Ports and Special Economic Zone.
Shares of Adani Enterprises sank 9.6 per cent on Monday, taking its market capitalisation losses to nearly US$28 billion since the release of Hindenburg’s report.
Adani Transmission dropped 10 per cent, while Adani Green Energy, Adani Total Gas, Adani Power and Adani Wilmar fell roughly 5 per cent.
Adani Ports was the only stock to buck the trend, rising 1.2 per cent. REUTERS, BLOOMBERG
