No govt committee to probe Adani; DRI investigation in Indonesia coal import not concluded: Minister

The government has not set up any committee to probe allegations a US short seller labelled against the Adani Group but stock market regulator SEBI is investigating market allegations against the group the Lok Sabha was informed on MondayA separate investigation into imports of Indonesian coal by the conglomerate hasnt reached finality Minister of State for Finance Pankaj Chaudhary saidLok Sabha saw several questions being put by MPs to the government on the Adani issue which were replied through written responses by the ministerTo a question asking if the government had constituted any committee to investigate allegations made against the Adani group by Hindenburg Research he said NoIn the January 24 report US short seller Hindenburg Research alleged that the Adani group was engaged in a brazen stock manipulation and accounting fraud and used offshore shell companies to inflate stock pricesThe group has denied all Hindenburg allegations calling them malicious baseless and a calculated attack on IndiaTo a separate question Chaudhary said the nine listed companies forming part of Adani group saw a 60 per cent decline in market capitalisation from January 24 2023 till March 1 subsequent to the publication of the Hindenburg reportOn the allegations he said the Securities and Exchange Board of India SEBI as the statutory regulator of securities markets is mandated to put in place regulatory frameworks for effecting stable operations and development of the securities markets including protection of investorsAlso Read SEBI investigating market allegations against Adani group companies says MoS FinanceAs per its mandate it conducts investigations into any alleged violations of its Regulations by any market entity he said It is accordingly undertaking investigation into the market allegations against the Adani Group of companiesHe however did not give detailsTo a separate question on investigation by the Directorate of Revenue Intelligence DRI into import of power generation and transmission equipment by Adani he said the probe has concluded and the report has been submitted before the relevant judicial authoritiesHe however did not reveal the findingsOn the alleged irregularities in imports of Indonesia coal by the Adani group companies he said investigations by DRI have not reached finality as information sought from exporting countries through execution of Letters Rogatory LRs is under litigationIn January 2020 the Supreme Court paved the way for DRI to investigate allegations of overvaluation of coal imports from Indonesia by the Adani group The apex court through the January 9 2020 order stayed an October 17 2019 judgment of the Bombay High Court which granted relief to Adani group by quashing LRs sent to various countries including Singapore seeking details of the groups coal imports from IndonesiaOn the Hindenburg allegations Chaudhary said SEBI had told the Supreme Court that it was already enquiring into the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report to identify violations of SEBI Regulations including but not limited to SEBI Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market Regulations 2003 SEBI Prohibition of Insider Trading Regulations 2015 SEBI Foreign Portfolio Investors Regulations 2019 Offshore Derivative Instruments ODI norms short selling norms if anyThe apex court on March 2 directed SEBI to conclude the investigations within two months It also constituted an expert committee for the assessment of the extant regulatory framework and for making recommendations to strengthen itThe minister said the government had suggested to the apex court that the expert committee should look into Hindenburg allegations as well as undisclosed short positions taken on Adani stocksThe nine Adani group companies which lost 60 per cent market value after Hindenburg report are part of BSE Sensex and have a combined weight of below 1 per cent in Nifty he saidThe volatility in the stocks of these companies have not had any significant impact at the systemic level Nifty 50 declined by around 29 per cent in the month of January 2023 and by around 49 per cent in the 2month period of January and February 2023 he saidThe minister said the pricing of individual stocks and variations over or undervaluation and the price risks borne by investors are determined by the dynamics of demand and supplyThe regulatory framework provides for surveillance mechanisms which are triggered in instances of volatility in share prices of specific companiesOn exposure of stateowned Life Insurance Corporation of India LIC to the Adani group he said the countrys largest insurance company had Rs 618264 crore outstanding loans to the conglomerate as on March 5 2023The five public sector general insurance companies have informed that these companies do not have loancredit exposure to Adani Group of companies he saidPublic sector banks have informed that loans are sanctioned after assessing the viability of projects prospective cash flows risk factors and availability of adequate security and repayment of loans are ensured by the revenue generated by the project and not by the market capitalisation of the companyHe referred to LICs January 30 statement to answer questions over the companys investments in Adani stocksIn that statement LIC had said it had over the years purchased shares in Adani group companies for Rs 30127 crore and its exposure to the conglomerate was 0975 per cent of its total AUM at book valuePublic sector general insurance companies New India Assurance Company Ltd United India Insurance Company Ltd National Insurance Company Ltd Oriental Insurance Company Ltd and General Insurance Corporation of India had a total exposure of Rs 34764 crore in Adani Group of companies as of January 31 2023 which is 014 per cent of the total AUM of all the five companies he addedThis story 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