‘India’s image isn’t suffering’: FM Sitharaman on withdrawal of Adani Enterprises FPO

Finance Minister Nirmala Sitharaman on Saturday said that the withdrawal of Adani Enterprises' Follow-on Public Offer had no impact on the country's macroeconomic fundamentals and reputation. On Wednesday, Adani Enterprises Ltd. decided to withdraw its FPO worth Rs 20,000 crore, after it was fully subscribed on January 31. “How many times have FPOs not withdrawn from this country and how many times has the image of India been suffering because of that and how many times have FPOs not come back,” she asked.

She said regulators, like SEBI, are monitoring the developments in the Adani group and they are independent to function. Earlier this week, the Reserve Bank of India (RBI) asked banks and Life Insurance Corporation to declare their exposures to the Adani group. Most banks, like SBI, Bank of Baroda, and LIC, issued their statements clarifying their stand.

“The market has functioned in prime condition. SEBI has worked on it well," Sitharaman said at a press conference in Mumbai.

The Adani group is facing one of its worst crises in recent years after US-based short-seller Hindenberg Research released a report accusing the group of lapses in its accounting and valuation. 

On Friday, Sitharaman affirmed that LIC and SBI were not “over-exposed” to Adani Group shares and that “investors’ confidence” would endure in the market.

She said that India remained "an absolutely well governed" country and a "very well regulated financial market."

The Union ministry of Corporate Affairs has also initiated a preliminary review of Adani Group's financial statements and other regulatory submissions made over the years, two senior government officials told Reuters on Friday. 

DIPAM secretary Tuhin Kant Pandey on Thursday said that state-owned insurance LIC’s exposure to Adani Group companies is within the insurance regulator Insurance Regulatory and Development Authority of India and its risk management framework.  

He added that the investments of the insurance giant, including in equities, are made following the company’s ‘risk management framework’ and that these investments go into the government securities, which are managed under 'concentration risk portfolio benchmarks'.   

“LIC has already made it clear and through a public notice of what their level of investments is and what is their value on a particular date of those investments," he said.

Since January 24, Adani Group companies have lost around Rs 9 lakh crore m-cap in the last seven trading sessions till February 3. The total market capitalisation of the Adani Group slipped to Rs 10 lakh crore on February 3 from Rs 19.2 lakh crore as of January 24, the day Hindenburg Research made its report public.