After U.S.-based short-seller Hindenburg Research made a litany of allegations against Adani Group opposition and investors accuse many Govt controlled Companies and Banks – including LIC and its investment in Adani group firm stocks
The LIC management will soon meet the top management of the crisis-ridden Adani Group and seek clarification on the crisis being faced by the diversified conglomerate, chairman M.R. Kumar said here on Thursday.
LIC’s investment into Adani group firms’ stock has come under criticism by the opposition parties as well as investors after U.S.-based short-seller charges against the Gautam Adani-led group, saying its companies manage and manipulate share prices, run offshore shell companies for round-tripping and lacking in corporate governance practices.
“Though our investor team has already sought clarifications from the Adanis, our top management could not contact them yet as we have been busy preparing the results. We are soon going to call them to meet us and explain. We want to understand what is happening in the market and in the group,” the chairman told reporters at the earnings conference on Thursday.
“We’ll be calling them in sometime soon to know how are they managing the whole crisis,” Mr. Kumar added.
Mr. Kumar, however, refused to give a timeline of the meeting between LIC and Adani group officials.
Adani Group share debacle LIC Chairman meet: LIC, which is the nation’s largest institutional investor, is the second largest shareholder in most of the listed Adani group companies, with a cumulative investment of ₹36,474.78 crore as of January 27, which in percentage terms is 4.23% of the total public holding in those companies. But for LIC’s ₹44.76 lakh crore investment asset under management, this is only 0.97%.
As of January 27, this investment was valued at over ₹56,000 crore, LIC had said on January 30, but since then these shares have further lost—cumulatively about $100 billion or about 60 per cent of their January 24 market value.
When asked, the chairman categorically said, “Our investments are still in the green and we have not made any provisions either for equity, which is the vast majority or for the debt. Our equity holding in the group is 4.23% of the total public holding of those firms. But from our total market investment of ₹44.76 lakh crore, this is only 0.97%” He said the Irdai (Insurance Regulatory and Development Authority of India) norms on investment caps it at 15% of a company’s equity, but “we have some exception wherein we hold more than 30% in some companies”.
Adani Group share debacle LIC Chairman meet: Some commentators were saying LIC need to work on LIC shareholders and investors and policy holders interest. They question if any LIC Chairman meet any other company boards before in which LIC had a bought and sold shares in the open market to discuss about volatality of shares? They question Why this special treatment to one group. They say LIC need to decide based on market intelligence, that too quickly through market operations not through news paper report of LIC meeting of Adani Group – The discussion with a company in which you buy and sell shares in market place is not fair market operation. If LIC thinks the share has got value it can continue to hold if LIC thinks it is volatile let them sell off based on fundamentals and long term projections based on earning of company and their own calculated value of the optimum share price, thus protecting their people. If LIC is meeting the Adani Group with a request to convert large portion of its shares (because of the volatility) into preferential shares, thus safeguarding LIC interests, then everyone will welcome their move. Otherwise when the issue is hot, If LIC meets the group, now people will think it is not to safeguard LIC interest but to safeguard Adani Group interests. They may already bet on what Chairman of LIC will come out and say, considering that the authority for the position of Chairman rests in Central Govt. on that Govt is the entire controversy of Adani shares debacle is accused of by Opposition. The Central Govt. extended the current Chairman’s term two times till March 2023, so the loyalty question and further extension interest in current Chairman’s current exercises cannot be set aside easily.