Are Sebi, MHA 'anti-national' for talking like Hindenburg?

It is that time of the year again when we begin making a list of individuals or organisations which are anti-India or anti-national. In this piece, I will start the ritual with a few names and perhaps keep adding in future articles.Excited? Here we go. First on the list are Securities and Exchange Board of India (Sebi) and Directorate of Revenue Intelligence (DRI), followed by the Union home ministry, almost every single financial news website in India and abroad, and finally, the Hindenburg Research Group. medium97494819Why anti-national?Let me explain. In July 2021, minister of state for finance Pankaj Chaudhary told Parliament that Adani group companies are being investigated by DRI and Sebi. Four foreign portfolio firms you may have never heard of have significant investment in Adani group companies. In July 2021 again, Sebi wrote to these firms demanding to know within 15 days who the ultimate owner of this investment is. Every single financial news website in India will tell you that the debt of the Adani group is extremely high. Just Google Adani+Debt+India and you will see an endless list of news websites expressing shock over the amount of debt this group has.During 2020-21 the share value of Adani Group companies jumped by 122-900%. This, at a time when the average growth in the Sensex was around 30%. medium97501255Before we turn to Hindenburg and how it is anti-India, please see this paragraph from another Indian financial news website:“A big surprise is Adani Total Gas, valued at Rs 1.48 lakh crore on June 18, 2021. It reported Rs 471 crore profit in FY21. In comparison, its much larger peer and the more profitable Gujarat Gas had a market cap of Rs 36,921 crore, though it generated a profit of Rs 1,275 crore. Indraprastha Gas, which posted a profit of Rs 1,249 crore, had a market cap of Rs 37,000 crore.“Valued at Rs 9.5 lakh crore before the crash, the Adani group reported an aggregate net profit of Rs 8,922.93 crore in FY21. Its gross and net debt stood at Rs 1.48 lakh crore and Rs 1.37 lakh crore. Mukesh Ambani's Reliance Industries (RIL), which generated a profit of Rs 53,739 crore in FY21 and has zero net debt, is valued at Rs 14.7 lakh crore. India's third most valuable firm, HDFC Bank, which posted Rs 31,116 crore profit in FY21, is valued just above Rs 8 lakh crore.”So, a company that has profit of Rs 471 crore is valued at Rs 1.48 lakh crore. Meanwhile, companies that have profits of Rs 1,275 crore and Rs 1,249 crore are valued at 20% of a company owned by Adani in the same sector. If you think something is strange here, your thoughts are attacking India. Adani in debt or others indebted?In August 2022, a report from CreditSights, Fitch group’s debt research unit, said the Adani group is “deeply over-leveraged”, and may, “in the worst-case scenario”, spiral into a debt trap and possibly default. CreditSights made minor corrections in its numbers after discussion with the Adani Group but their recommendation remained the same.In 2016, Gautam Adani’s elder brother featured in the Panama Papers list.Now, turning to Hindenburg. Hindenburg Group is a short-seller — it bets on companies’ stock value falling and explains why it has bet that way. It does this for companies across the world. It has not done so ever for Tata or Reliance Industries or Birla or any other industrial house which has been working in India for decades. Adani’s chief financial officer (CFO), standing in front of the Indian national flag, said that the Hindenburg Report is an attack on India. He didn’t stop here, he compared the report with the Jallianwala Bagh massacre, where over a thousand unarmed Indians including children were mercilessly butchered by the British.Watch: Adani CFO's response to the Hindenburg report medium nocaptionhttps://www.youtube.com/watch?v=wH6jMHv_HqIThis CFO, Jugeshinder Singh, is an Australian citizen.The Hindenburg Group, in response said, “To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future. We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation.”Out of the total debt raised by the Adani Group, 40% is from state-owned banks, the largest of which is from State Bank of India. Life Insurance Corporation has also lent about $9bn to the group. In comparison, the debt given by private banks is only 10% of their total debt.What do state-owned banks know that private-owned banks don’t? What information makes them so much more eager to lend to Adani?While Adani’s spokespersons and a troll army on Twitter argue that Hindenburg is anti-India, Sebi doesn’t seem to think so, and has decided to increase its scrutiny of the group.Bottomline? Be careful of who you invest with. Demand that your government does not give a majority of contracts to any monopoly. Demand more accountability from public sector banks. It is possible that the allegations made by Hindenburg are not true, and for India’s sake, I hope that is the case. If they turn out to be true however, it is not only the Adani Group and its investors who will be adversely affected, any crash will have a massive ripple effect on the Indian economy. As also argued by the Election Commission, all citizens must add their voice to the demand for the abolition of opaque electoral bonds. If only we could see who is donating money to whichever party is in power, we would find it easier to understand why a public sector bank is being so generous with our money.Finally, if you ask someone a question and they hide behind nationalism, understand that you are being robbed.Read more stories by the author here