Adani Group CFO Jugeshinder Singh said that the global index provider Morgan Stanley Capital International (MSCI) was yet to reach out to them to seek their response over the Hindenburg Research report on the conglomerate.
“That question is more relevant for [the] MSCI because they haven’t yet formally reached out to us. In a [highly] volatile situation, they will normally ask [this] question,” Singh stated in an exclusive conversation with Business Today’s Siddharth Zarabi. He added that the response filed by the ports-to-power conglomerate dated January 29 will be submitted to the MSCI.
Singh replied to a question about whether the MSCI will drop Adani Group stocks from its index. All Adani Group stocks barring Adani Wilmar have a nearly 5.75 per cent weight on the MSCI Indian Standard index. These stocks are Adani Enterprises, Adani Ports, Adani Transmission, Adani Total Gas, Adani Power, Adani Green, ACC and Ambuja.
“Like you rightly said, as a finance professional from a business background, I don’t like to speculate,” the Adani Group CFO pointed out on the concerns around governance and practices of the group. He added that a lot goes on strategically and there is a lot of gatekeeping and issues related to the emergence of a large platform.
“When you emerge on a global stage as a large platform, there are growing pains. Now, some of them, we have to deal with in a mature way rather than saying MSCI has not done this before,” he furthermore mentioned.
The CFO’s comments come after the global index sought feedback on Adani Group and its associated securities after the Hindenburg report. The MSCI said in a statement accessed by the news agency Reuters, “MSCI is closely monitoring publicly available information regarding the situation and the factors that may impact the eligibility of those relevant securities for the MSCI Global Investable Market Indexes.”
The CFO also gave out statistics about various companies of the group and said they have consistently scored high governance ratings. Singh mentioned, “All I can tell you is this: On our governance rating if you look at the Adani Ports, its DJSI score puts it in the top 3 per cent in the world on governance. If you look at Adani Transmission, fully compliant with [the] six principles of TCFT. If you look at Adani Enterprises, its DJSI score out of 135 global companies is at number 7.”
Singh further said that Adani Green is growing at an annual rate of 40 per cent, a rate unachievable even for tech companies at present. Furthermore, Singh said that the State Bank of India (SBI), Adani Ports, Adani Green, and Adani Transmission have the same credit ratings. Public institutions such as the SBI and the Life Insurance Corporation of India (LIC) are among Adani Group’s biggest investors.
When asked about the discrepancies in the conglomerate’s accounts, Singh stated that Adani Group’s businesses are capital-intensive. He also explained that the depreciation is high due to the infrastructure business, which results in profits getting suppressed.
Singh said, “We are infra. Every single rupee we borrow is borrowed against an asset and the amount we borrow is linked to the return you can earn on the asset.”
Activist short seller firm Hindenburg Research has accused the Gautam Adani-led ports-to-power conglomerate of leading the “biggest con in corporate history.” The activist short seller firm stated that the group has engaged in stock manipulation and accounting fraud over decades.
Also read: ‘Hindenburg copy-pasted our disclosures, did no research,’ says Adani Group CFO Jugeshinder Singh
Also read: Adani Group hits back at Hindenburg, says its conduct a ‘calculated securities fraud’