The Adani’s Crash

Adani crash

Gautam Adani, the founder of the Adani group, became the second richest person in Asia this year. His net worth rose by $43 Billion to $77 Billion. This all happened because the Adani group has 6 listed companies and all have been on a mind-boggling trajectory. These are:

1- Adani Enterprises

2- Adani Greens

3- Adani Ports

4- Adani Power

5- Adani Total Gas

6- Adani Transmission

Since March 2020, if we take a look at the share price, we see that Adani enterprises’ share price rose by 962% in 1 year, whereas the revenue of the company saw an increase of just 3% and net profit by 13% in last 3 years. It is not the only example, let’s have a look at Adani’s total gas, Its share price rose by more than 1000%, but the revenue just by 7% and net profit by 44%. If we look at Adani transmission, Its share price rose by 696% but revenue just by 38%, and net profit by 3%. A similar pattern can be observed in other companies too.

So by now, You might have understood the mismatch in share price and business performance of the company. After a tremendous rise, all 6 stocks of the Adani group hit the lower circuit in the initial hours of trading on 14th June 2021. As per the Forbes Real-time Billionaires list, nearly Rs.55000 Crore of Gautam Adani’s wealth got erased as of 10 AM 14 June.

So what is the reason behind this drastic fall?

There are basically 6 main funds that had invested in Adani group companies, they are:
1- Elara India Opportunities Fund
2- Albula Investment Fund
3- Lts Investment Fund
4- Vespera Fund Ltd
5- Cresta Fund Ltd
6- Apms Investment Fund

More than 90% of the net worth of these funds comes from the Adani group. But the most fascinating fact revealed is that 3 of them are based out of Mauritius at the same address in Port Louise, Also these 3 don’t even have a website. These are:
1- Albula Investment Fund
2- Cresta Fund Ltd
3- Apms Investment Fund

Recently NSDL(National Securities Depository Ltd) froze all these 3 funds, because of which these funds are not allowed to buy or sell any assets or security. Officials claim that the disclosure made by these funds was insufficient. Last year SEBI(Securities and Exchange Board of India) made KYC norms strict for Mauritius-based funds.

Because Mauritius is generally used for round-tripping i.e converting black money to white. These 3 funds alone have invested around Rs.43500 crores in Adani groups. SEBI is investigating whether the share prices of companies of the Adani group were manipulated. And because of it, the share price is falling drastically.

Also, as per SEBI, there must be more than 25% public shareholding in each company, so there can be no price manipulation. But in the Adani group, FPI’s(Foreign portfolio investment) are holding a lot of shares, such as in Adani Enterprises there is 25% public shareholding but out of it 15% public shareholding is of FPI’s. A similar pattern is seen in the other 5 companies too.

When retail investors hold such a small amount of shares, The share price fluctuates extra-ordinarily. This happens because of the very less no. of shares and the sudden demand for shares, which led to increasing in the share prices. The same is seen in the Adani group.

Sucheta Dalal, who exposed Harshad Mehta, tweeted on 12 June 2021:

Which forces us to think that something much shadier is going on.

So what do you think about this story, Do tell us in the comment section?

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