The release of the Hindenburg hit-piece against the Adani Group was over ten days ago. It led to a gigantic loss of $118 billion in market value for India’s former largest conglomerate.
Here, this article addresses doomsday predictions and dispel the rumour mongering regarding the fundamentals of the Indian economy, its banks, insurers and leading industrialists.
LIC’s Adani Group Exposure Within Boundaries
Breaking the silence on Adani-Hindenburg row, top government functionaries have dispelled misgivings about the state of investment made by India’s largest insurer LIC and banking major SBI. In a recent interview, Finance Minister Nirmala Sitharaman categorically assured that the exposure of SBI and LIC in Adani group is within the IRDAI framework.
She added that their management has personally explained that their exposure to Adani Group is not overexposed.
Reiterating the same, DIPAM secretary Tuhin Kant Pandey assured the insurers that there is no need to panic. He said, “Life Insurance Corporation of India (LIC) shareholding in Adani Group is within the regulatory and its risk management framework.”
Earlier LIC had informed about its investment in the Adani Group and market valuation of these shareholdings. As of 30th January, the total value of LIC’s shareholding in Adani Group purchased over the last many years was Rs 30,127 crore. The market value of them was slated at Rs 56,142 crore as on 27th of January.
Undoubtedly, these shareholdings have taken a massive hit after the Adani-Hindenburg fiasco. But even the erosion in LIC’s profit from Adani shares should not be used to paint a doomsday scenario.
As per LIC, its exposure in the Adani group was 0.975 per cent at book value, as of 30th January, 2023. As of September 30, 2022, the total assets under management (AUM) of LIC stood at over Rs 41.66 lakh crores.
Similar situation prevails with SBI’s investment in Adani Group. Its total investment was pegged at Rs. 27,000 crores, accounting to around 0.8-0.9 percent of total Assets Under Management.
On one hand, it is wise to carefully evaluate the risk associated with each individual shareholding. The market works on sentiments and when the farce of this report will be known to everyone, Adani’s share may even start showing a much speedier rally at the stock exchange. So, it is unfair to dismiss Indian industrialists and conglomerates based on a biased report consisting of previously known debt information mixed with anti-India propaganda and economic sabotage.
The Hindenburg report lacks credibility as it is from a vested party – a short-seller who profits from tarnishing reputable organisations. This fabricated report has sparked a discussion on the need for an independent agency to hold foreign propaganda organisations accountable.
But till that happens, reputable organisations like RBI, Indian banks and insurers are dousing the fire deliberately being ignited to burn investors’ confidence in the Indian market. In a supposed doomsday scenario, many players find their interest fulfilled and the nation has to unmask those players.
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