Business

Richest Asian Gautam Adani’s group on Sunday expressed confidence that the Rs 20,000 crore follow-on share sale of its flagship firm will sail through despite a massive hammering of the conglomerate’s stocks following a scathing report by a U.S.-based short seller.

Group CFO Jugeshinder Singh said no change in offering price or schedule is being considered due to temporary volatility in the market as the follow-on public offer of Adani Enterprises Ltd. is the best vehicle for strategic institutional investors to own a pie of the conglomerate’s fast expanding airports, mining, roads, new energy and data centre businesses.

All seven Adani group companies’ stocks fell sharply over the last two trading sessions, wiping out Rs 10.7 lakh crore of investor wealth after Hindenburg Research alleged that the ports-to-energy-to-cement conglomerate had engaged in ‘brazen stock manipulation and accounting fraud’ for decades.

The sell-off is being looked into by market regulator SEBI and stock exchanges.

In an interview to PTI, Singh said the group will release a comprehensive response to the Hindenburg report, “providing documentary evidence” to “clearly outline that there was no research done and that there wasn’t any investigating reporting. Only pure baseless misrepresentation of factual situations, if not lies.”

He cited an example of the Hindenburg report alleging that inflation in revenue was visible from an asset transferred to a private company and the private company immediately writing down that asset.

“That is pure misrepresentation of our disclosures. Adani Enterprises Ltd. had already written down that asset and AEL had already booked a loss, after which that asset went over to the private side. It was disclosed as a related party transaction. They (Hindenburg) simply took half of it and therefore it is deliberate misrepresentation and falsehood. And the (Hindenburg) report is full of such points,” he said. “They deliberately misled.”

The FPO of AEL will go on as scheduled, he said, expressing confidence that it will be fully subscribed by the end of the offer period on Jan. 31.

The share sale — the second largest in India — got subscribed just 1% on the opening day on Friday. Against an offer of 4.55 crore shares of AEL, only 4.7 lakh were subscribed, according to information available from the BSE.

Adani Enterprises fell almost 20% to trade below the offer price of its secondary sale as all the seven listed companies of the conglomerate took a beating in the aftermath of the Hindenburg report. The firm is selling shares in a price band of Rs 3,112 to Rs 3,276. On Friday, its share price closed at Rs 2,762.15 on the BSE.

“All our stakeholders including bankers and investors have full faith in the FPO. We are extremely confident about the success of the FPO,” he said.

On Wednesday, Adani Enterprises raised Rs 5,985 crore from anchor investors.

Asked why would an investor subscribe for the FPO when the same share is available in the open market at a lower price, Singh said AEL has a very limited free float and so while retail investors looking for 50-100 shares can buy from the market, a strategic institutional investor would not find the chunk of shares they need.

“For an institutional investor who likes larger chunky holding, that option is not available as the free float is not there,” he said. “One of the primary aims of the FPO is to increase liquidity of shares and increase the free float.”

He further said strategic long-term institutional investors are not investing in AEL for just the value of its shares. “They are investing in AEL as an incubator. The value of AEL sits more in the airports business it holds, in the road business it is doing, in new energy projects it is doing, in data centre business and in the mining business. All these businesses are performing very well.”

AEL currently houses new businesses such as hydrogen, where the group plans to invest $50 billion over the next 10 years across the value chain, flourishing airport operations, mining, data centre and roads and logistics. These businesses are planned to be demerged between 2025 and 2028 after they achieve a basic investment profile and maturity.

“Investors investing in AEL will get those businesses as well. They see long term value is still there. So short term volatility in price doesn’t make a difference to the value of airports business, to the value of roads business, to the value of new energy ventures and to the value of data centres. For long-term investors who want chunky positions, this is the best option,” he said.

The group is looking to become one of the lowest cost producers of hydrogen — a fuel of the future that has zero carbon footprint. It is also betting big on its airport business with an aim to become the largest service base in the country in the coming years, outside of government services.

Adani, 60, started as a trader and has been on a rapid diversification spree, expanding an empire centred on ports and coal mining to include airports, data centres and cement as well as green energy. He now owns a media company too.

Singh said the follow-on share sale is aimed at widening the shareholder base by bringing in more retail, high networth and institutional investors.

This would also address concerns of liquidity by increasing the free float, he said, adding the company wants to increase the participation of retail investors and that is why it chose a primary issue instead of a rights issue.

AEL will use the money raised to fund green hydrogen projects, airport facilities and greenfield expressways, besides paring some of its debt.

On the sell-off in group stocks, he said the group is concerned about the impact it will have on minority small investors and hoped regulatory authorities will “look into the ‘deliberate’ attempt to create excess volatility.”

“That (sell-off) is something that should be looked into,” he said without elaborating.

Irrespective of that, “we are confident that the offer will go through,” he added.

Asked if the retail portion too will be full-subscribed, he evaded a direct reply, saying, “We are confident that the issue will be fully subscribed.”

On Friday, retail investors put in bids for close to 4 lakh shares against 2.29 crore shares reserved for them, while qualified institutional buyers sought just 2,656 shares against 1.28 crore reserved for them. Non-institutional investors sought 60,456 shares against an offer of 96.16 lakh shares.

On the response that the company will bring out on the Hindenburg report, Singh said the group has put together a comprehensive response in 3 days time to a report that purportedly took 2 years to prepare.

Regarding taking legal action against the US firm, he said, “We have now discovered one part which is that this report is a misrepresentation. The second part will be to understand the deliberate intent to harm Indian shareholders and business. That will be a legal review and once it is over a view will be taken.”

Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.

Two fighter planes of the Indian Air Force—Sukhoi-30 and Mirage-2000—crashed in Morena district of Madhya Pradesh on Saturday, police officials said.

Morena Superintendent of Police Ashutosh Bagri confirmed the crash.

Additional Director General of Police Adarsh Katiyar told PTI that the cause of the crash is not clear yet.

“It is not clear whether the planes collided against each other or not,” he said.

Two pilots ejected safely, but the third one is missing, he said.

Sources said the two IAF fighter jets had taken off from the Gwalior airport before they met with the accident.

Madhya Pradesh Chief Minister Shivraj Singh Chouhan said in a tweet: “The news of the crash of Sukhoi-30 and Mirage-2000 aircraft of the Air Force near Kolaras in Morena is very sad. I have instructed the local administration to cooperate with the Air Force in quick rescue and relief work. I pray to God that the pilots of the planes are safe.”

The box office has been uncharacteristically kind this January, usually an unfavourable month for Hindi film releases over the years. Except for a stark Salman Khan, Akshay Kumar or an Aamir Khan release that have hit the bulls eye, most big releases have not found the legs to make the long run, still wobbly from the hangover of the year gone by.

For a dip in nostalgic waters, Shah Rukh Khan’s home production ‘Phir Bhi Dil Hai Hindustani’ (2000) too released in the same period but failed to put up numbers at the box office then.

Twenty three years on, the mid-week release of Siddharth Anand’s ‘Pathaan’ starring the Khan himself along with Deepika Padukone and John Abraham in key roles took an earth shattering opening to collect Rs 56 crore (approx.) at the domestic box office on its opening day, a new record for any Hindi film, that too on a non-holiday.

Industry and trade analysts are currently in overdrive trying to get a grip on the astronomical numbers the film is notching up. Even at the overseas box office it shot past the blockbuster ‘Avatar – The Way of Water’ to take up the No.1 spot (at the North American box office) with a total cumulative of $4.50 million (Rs 37 crore) approximately.

As Bollywood struggled last year with a horde of flops peppered with paltry successes and as superstars waded into a bottomless abyss, tough questions were asked about the future of the Hindi film industry. With the mindboggling success of ‘Pathaan’ those important questions will now only be put on the backburner as Bollywood revels and celebrates a bona fide Hindi blockbuster in the here and now.

As the box office wheel of fortune turns gold for Bollywood and the flop-hit-blockbuster-flop cycle continues, the film industry is fervently hoping that the success of ‘Pathaan’ keeps the hit cycle going for a good as the chaos of flops is kept at bay.

An Aquarian Juggernaut Rewrites Records

Bollywood may as well adopt January as their favourite month, named after the two-headed Janus the Roman God of doorways, preferably the head beholding some rollicking times ahead rather than the one forlornly gazing at the tough times gone by. Made with a budget of Rs 250-300 crore (approx.) ‘Pathaan’ carries on the successful streak that the Yashraj Film Production house have been enjoying with their actioners for some years now starring huge names like Salman Khan and Hrithik Roshan that have gone to spawn a YRF Spy Universe theme.

The film is on its way to emerge as the biggest box office hit of Bollywood, creating new records left, right and centre. From the initial three days it has collected Rs 164 crore (approx.) at the domestic box office from all versions, the trade is looking at a weekend two day total of at least another Rs 80-90 crore to add to this. This eventually will make ‘Pathaan’ the highest ever Hindi film grosser of all time, a record that will take some beating and with the current Shah Rukh hysteria, the bets are on him to do it himself once again.

This Khan Never Saved Anything for the Swim Back

Khan was still a rookie when he signed on to play a career defining role as a lover anti-hero in Yash Chopra’s ‘Darr’ (1993). He had in fact stepped into the role after Aamir Khan declined it earlier because the hero, Sunny Deol he felt would hog the limelight. Shah Rukh however had nothing to lose. At the ending of the film as Khan’s character repeatedly knifed the hero the rapturous audiences were clapping for him, rather than Deol’s.

The slashing carved a new high road for Shah Rukh Khan who has since never looked back. A thought he has mirrored in one of his latest tweets, posed as an advice from a 57 year old, that one is meant to move forward, not coming back, to finish what was started; referencing a line from the Hollywood film, “Gattaca”.

Khan has carried on that trek blossoming as the quintessential Bollywood hero, probably the last of the Hindi films evergreen superstars. That ‘Pathaan’ was releasing after a four year hiatus since Khan’s last release, ‘Zero’ (2018) had Khan almost bearing the weight of Bollywood on his own, as other Bollywood stars were given the short shrift by the mercurial domestic box office.

As the vice-like grip of a monstrous recession gets even more tighter, Khan’s ‘Pathaan’ even ensured that over 20 odd cinema halls that had downed their shutters sprung back to life with the films release. Such has been the phenomenal response to his new film that his two releases that are to follow this year, “Jawaan” and “Dunki” have their task cut out to match  the “Pathaan” numbers at the box office. 

Is Bollywood Back?

For starters, the Hindi film industry never went anywhere did it? It just needs to discover new frontiers as it adapts to the neoteric way people are viewing cinema and consuming various forms of entertainment. Once in a while, something like a ‘Pathaan’ is needed, a no-holds barred throwback to good old days of a classic unapologetic Hindi film potboiler with adequate doses of dance, action and emotion.

Bring it on, warts and all for there is nothing like perfect cinema and for the eternal question as to why do some movies fail and others succeed? To this no one has an answer, not even Shah Rukh Khan. If asked a month ago whether ‘Pathaan’ would strike gold at the box office, self-proclaimed film industry experts would have shied away from a response as the film was mired in one controversy after another.

Even the ‘Boycott Bollywood’ brigade with campaign calls for boycotting the film trended on social media. But with ‘Pathaan’ and Shah Rukh Khan coming out on top, all of them have retreated into their dark and dungy rathole, for they were unaware that they were up against a certain Khan who is Mr. Bollywood himself.

Anand Mathew is a social development consultant based in New Delhi. 

The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.

Adani Enterprises Ltd., will continue its Follow on Public Offer at the planned price band, according to a company statement.

“There is no change in either the schedule or the issue price,” it said.

Billionaire Gautam Adani-owned companies witnessed a slide in their share price following a report by Hindenburg Research alleging fraud. Adani Group rejected the report terming it as a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”

The company is offering shares on a partially paid basis, aggregating up to Rs 20,000 crore, it said in its red herring prospectus filed with the markets regulator.

It has pegged the floor price for the issue at Rs 3,112 per share and the cap price at Rs 3,276 apiece, according to the red herring prospectus.

It is also offering a discount of Rs 64 per share to retail investors.

“All our stakeholders including bankers and investors have full faith in the FPO. We are extremely confident about the success of the FPO,” the statement noted.

The statement comes in clarification of news reports which stated that investment bankers working on the FPO were considering changes due to a sharp fall in Adani Group stock prices.