A battle lies ahead for Adani Group CFO Jugeshinder Singh after Hindenburg blow

A long battle lies ahead for Adani Group Chief Financial Officer Jugeshinder Singh aka Robbie Singh, who has been at the forefront of the group’s attempt at damage-control amid the conglomerate’s deepest crisis yet. Right after Hindenburg Research published its damning report on Adani Group, accusing it of financial misdeeds, accounting fraud and stock manipulation, Singh set out to correct the course. 

Singh was the first person from the Adani Group to come out and deny Hindenburg's charges. The allegations had cast a shadow on the Rs 20,000 crore Adani Enterprises FPO – an exercise Singh had led for the Adani Group – hours before it was supposed to open.

In a carefully drafted address, Singh called the allegations a “malicious combination of selective misinformation and stale, baseless and discredited allegations”. He stated that the report was an attempt to damage the follow-on public offering. This was followed by a 413-page response to Hindenburg's allegations.

ROLLER COASTER RIDE OF ADANI ENTERPRISES FPO

In the days that followed, Singh’s role in the firefighting became more apparent as he made frequent appearances in public and gave media interviews. Perhaps, the immediate concern was the FPO that seemed to be in jeopardy. But nearly 2 months later, they have an uphill task in hand. 

In an interview to Business Today TV, Singh sounded optimistic about the offering. He had said that he was confident that the Rs 20,000 crore FPO would sail through and that the subscription would be led majorly by institutional and long-term strategic booking. 

The FPO saw lacklustre response in the initial days but was fully subscribed on the last day. In fact, on the first day of the FPO, it was only subscribed 1 per cent. Non-institutional investors put in bids for over three times the 96.16 lakh shares reserved for them, but the response from retail investors and company employees was muted.

While on the face of it, the conglomerate seemed vindicated, the Adani Group subsequently withdrew the FPO and decided to return the money to the investors. It said that the “company aims to protect the interest of its investing community by returning the FPO proceeds”.

From thereon, the group has been battling dipping shares and a volatile market. Seven listed companies of the group have lost over $140 billion in market value since January 24 when the report was released. 

While the group has recovered some ground, the fight is far from over. The company denied the Hindenburg allegations, but its reputation took a serious hit. Not only turmoil in the markets, but the allegations caused a huge political storm in the country too. 

POLITICAL STORM OVER ADANI-HINDENBURG ROW

Opposition parties accused Gautam Adani of leveraging his political connections that run right up to the highest echelons of power, and defrauding investors. One of the loudest voices has been of Trinamool MP Mahua Moitra who has been demanding a thorough investigation of the conglomerate and criticised market regulator SEBI for not proactively probing the allegations. 

She even wrote to SEBI demanding answers. Moitra accused Gautam Adani of misusing the system to acquire businesses. 

Congress leader Rahul Gandhi also criticised Prime Minister Narendra Modi and accused him of safeguarding Gautam Adani. "When we question the Prime Minister's relation with Adani in Parliament, our entire speech is expunged. We will ask in Parliament thousands of times till the truth of Adani ji is out, we will not stop," he said at the 85th plenary meeting of the party. Days later, he said that the Prime Minister could not answer any of the questions he posed on Adani. 

It is not only the pressures of dipping shares, but also the political attacks that make Jugeshinder Singh’s job all the more difficult. Singh also came in the line of fire after social media users questioned his citizenship. Singh, an Australian citizen with a Person of Indian Origin card, was severely criticised for playing up the nationalistic sentiment by using the Indian Tricolour in the background of a video statement he had issued. 

DEFENDING ADANI'S AUDITORS

Singh also took up the task of defending Shah Dhandharia, a homegrown audit firm that signed off on Adani Enterprises and Adani Total Gas’ annual audit reports. Shah Dhandharia was accused by Hindenburg o f hardly being “capable of complex audit work”. To this, the CFO told Business Today that it is their duty to ensure that homegrown, small companies get all the support they require to develop into big companies. “If we support the development of a small firm to become a proper, good, accounting firm, how is that a bad thing? Is it not our responsibility?,” he had said. 

To add to the mounting pressure, the asset management unit of JPMorgan Chase & Co offloaded ESG funds of Adani companies. Norway’s largest pension fund KLP too dumped its entire holding of shares in Adani Green Energy Ltd stating that Adani is using stock from companies marketed as “green” as collateral in a credit facility that’s helping to finance the Carmichael coal mine in Australia, via Adani Enterprises Ltd.

LEADING ADANI ROADSHOWS

The Adani Group CFO, who participated in roadshows in Singapore and Hong Kong to shore up investor sentiments, will now also participate in the roadshows in Dubai, London and several cities of the US, scheduled from March 7-15. Roadshows are a series of presentations put up for investors at various locations before a public offering to shore up investments and to present investment opportunities to potential investors. He also reportedly called up bondholders earlier this month as an attempt to assuage investor concerns. 

When, during the Asian roadshows, Singh was asked if they were looking to refinance any debt, the CFO said there were no such plans. Singh’s denial of the plans was in line with the company executives’ statement that the group has enough money to repay debt due over the next three years, in addition to an $800 million credit facility. 

Lenders like Barclays, BNP Paribas, DBS Bank, Deutsche Bank, Emirates NBD Capital, ING, IMI-Intesa Sanpaolo, MUFG, Mizuho, SMBC Nikko and Standard Chartered Bank, who were part of the roadshows were reportedly given over 10 pages of presentation on topics ranging from earnings to the debt maturity profile, as per a Bloomberg report. 

SUPREME COURT'S ORDER ON ADANI-HINDENBURG ROW   

While Singh continues to do his bit with the roadshows in managing the crisis Adani Group faces, there's a lot he can't control. The Supreme Court of India has asked SEBI to look into the matter and ascertain if the conglomerate violated market norms. SEBI has been asked to submit the report within 2 months. The court also formed a six-member expert committee to review the extant frame in order to protect Indian investors.

It has been one and half months since the Hindenburg report was released on January 24, and the Adani Group is still reeling under its impact. Gautam Adani believes that the investigations will bring finality in a time bound manner and that “truth will prevail”. 

While that may be so, it is also obvious that Singh will have a task in hand in managing perceptions. Singh, a Postgraduate Diploma in Applied Finance from Bond University with over 16 years of global investment banking experience in Australia, New Zealand, North America, Europe and Asia, has been rightly put to the task. 

Also read 

Adani Group firefights Hindenburg-inflicted damage: Roadshows in London, Dubai, US 

Adani-Hindenburg saga: Fund managers say governance, transparency issues still loom large over Adani
 

Ahead of road shows, Adani Group pre-pays share-backed financing worth Rs 7,374 cr