WEBVTT - Adani Group's Hindenburg Moment 0:00:02.560 --> 0:00:07.000 You're listening to Asia Centric from Bloomberg Intelligence, the podcast 0:00:07.040 --> 0:00:10.080 that pulls back the curtain on global business so you 0:00:10.160 --> 0:00:14.400 can invest better across the Pacific rim. I'm Tom Corvette 0:00:14.440 --> 0:00:18.360 in Hong Kong, and I'm John Lee. India's Adani Group 0:00:18.440 --> 0:00:22.320 is a sprawling corporate empire with ports, power and mining 0:00:22.400 --> 0:00:25.799 driving its growth. But a bombshell report from US short 0:00:25.840 --> 0:00:30.920 seller Hindenburg Research turned Adani's fortunes upside down almost overnight. 0:00:31.200 --> 0:00:34.440 The resulting stock selloff wiped out more than one hundred 0:00:34.479 --> 0:00:38.479 and thirty billion dollars in shareholder wealth. It also knocked 0:00:38.520 --> 0:00:41.559 founder Galtam Adani out of the ranks of the world's 0:00:41.600 --> 0:00:45.760 ten wealthiest people, spotting a crisis of confidence and a 0:00:45.880 --> 0:00:49.440 scramble for a damage control. How could a single report 0:00:49.479 --> 0:00:52.800 from a little known research firm send an entire corporate 0:00:52.800 --> 0:00:56.920 empire sprawling into crisis despite its denials And what does 0:00:56.960 --> 0:01:00.200 this mean for emerging market investors? Let's bring in three 0:01:00.280 --> 0:01:03.840 experts from Bloomberg Intelligence to sort it all out. Kumar 0:01:03.960 --> 0:01:07.880 Galta are emerging markets quant strategist. I think quality of 0:01:07.920 --> 0:01:11.280 auditors is important, but I think one can't based conclusion 0:01:11.440 --> 0:01:14.279 on the size of the Farmer loan. Sharon Chen, senior 0:01:14.319 --> 0:01:21.080 credit analyst, transparency has actually improved. Nittan Chanduka, India equity strategist. 0:01:21.160 --> 0:01:24.199 Adani is not India and India is not Dani Doll 0:01:24.319 --> 0:01:28.160 three of them from Singapore. Everybody welcome as a credit 0:01:28.200 --> 0:01:31.480 analyst who covers some of the Adani companies. How shocked 0:01:31.480 --> 0:01:35.399 were you when the Hindenberg research report came out? So John, 0:01:35.560 --> 0:01:38.959 the allocations in the Hindenburg research report, actually most of 0:01:39.000 --> 0:01:41.800 them were already in the public domain. So to give 0:01:41.800 --> 0:01:45.360 you an example, you know, the research report talked about 0:01:45.520 --> 0:01:50.960 stock price manipulation using Offshan Mauritius funds, and there were 0:01:50.960 --> 0:01:53.760 already reports of this like two years ago, and the 0:01:53.840 --> 0:01:57.680 market regulator was looking into it as well, although we 0:01:57.720 --> 0:02:01.640 didn't hear much after that. So it is surprising in 0:02:01.760 --> 0:02:06.880 terms of the market reaction, and also putting everything together 0:02:07.000 --> 0:02:10.320 might have been surprising, but actually some of this were 0:02:10.320 --> 0:02:13.880 already concerns in the past, even though auditors like some 0:02:13.960 --> 0:02:16.680 of them being not being audited by the Big Four 0:02:17.200 --> 0:02:20.200 was known to the market. So the way the whole 0:02:20.320 --> 0:02:24.120 report was packaged maybe probably that was a surprising event 0:02:24.120 --> 0:02:26.880 for the market. And these shares were actually trading at 0:02:26.960 --> 0:02:30.720 very high valuations, which is quite unheard of for an 0:02:30.720 --> 0:02:35.080 infrastructure based group. So like maybe it just proved to 0:02:35.080 --> 0:02:38.600 be a catalyst to click the bubble. Can you talk 0:02:38.639 --> 0:02:42.360 about some of the valuations. The Hindenberg report mentioned that 0:02:42.600 --> 0:02:45.400 these stocks, some of the Adani stocks went up ten 0:02:45.440 --> 0:02:48.720 to twenty times over a three year period. They did 0:02:48.800 --> 0:02:51.840 mention that I think Adwanni Enterprise and Total Gas were 0:02:51.880 --> 0:02:54.840 training on like five hundred to eight hundred times pear. 0:02:55.400 --> 0:03:00.000 They did seem quite expensive, as you mentioned for infrastructure stocks, Yeah, 0:03:00.000 --> 0:03:02.280 I mean because of the sharp run up in the 0:03:02.360 --> 0:03:05.280 shape prices, the stocks were actually been up to quite 0:03:05.480 --> 0:03:10.160 unreasonable valuations, which you also point out to part of 0:03:10.240 --> 0:03:14.359 this is probably because of like a low free float 0:03:14.400 --> 0:03:18.640 of the group shares. So whenever a lot of liquidity 0:03:18.720 --> 0:03:22.960 gushes into stocks with very low free float, they tend 0:03:22.960 --> 0:03:26.560 to have more impact on the market, and maybe that 0:03:26.639 --> 0:03:29.760 was the reason why they were fading at such high valuations. 0:03:29.800 --> 0:03:32.760 In the Supreme Court is taking steps to probe deeper 0:03:32.760 --> 0:03:35.880 in the Hindenberg's allegations. What signaled do you think that 0:03:36.080 --> 0:03:40.520 sends to the public and the investment community. Ordani's well 0:03:40.560 --> 0:03:43.360 starting the snowball or is the court stepping in because 0:03:43.360 --> 0:03:46.680 it sees an opportunity to pull order from the jaws 0:03:46.720 --> 0:03:51.080 of chaos. So it's difficult to comment at this point 0:03:51.120 --> 0:03:54.720 of time why they are intervening. But actually maybe the 0:03:55.080 --> 0:03:58.720 committee that they have appointed is actually quite quite robust 0:03:58.760 --> 0:04:02.080 and like they comes with a very strong pedigree, and 0:04:02.160 --> 0:04:04.400 I'm sure that will have a and like a clear 0:04:04.520 --> 0:04:08.880 verdict on on this ongoing issue because these allegations keep 0:04:08.920 --> 0:04:12.160 cropping up our periodic basis, So it will be good 0:04:12.200 --> 0:04:14.880 for the market to have a final clarity on what 0:04:15.120 --> 0:04:17.240 who is right and who is wrong? Sure, and chan 0:04:17.400 --> 0:04:22.160 any thoughts on that. Obviously, Hendenburgh's report resonated with somebody 0:04:22.360 --> 0:04:26.720 quite high up in the Indian legal and regulatory system. Well, 0:04:26.760 --> 0:04:29.080 you know, looking in from outside, I would say that 0:04:29.200 --> 0:04:33.160 this in a way is positive as it could increase 0:04:33.200 --> 0:04:35.480 the chances of some sort of clarity coming out of 0:04:35.520 --> 0:04:38.760 these sort of investigations. You know, when we talk about 0:04:38.760 --> 0:04:41.880 some of the allegations, the focus here is really on 0:04:41.920 --> 0:04:45.960 the alleged stock price manipulation and the related party disclosures. 0:04:46.400 --> 0:04:49.200 So for the first one to do with the Mauritius 0:04:49.200 --> 0:04:55.000 funds two years ago, the regulator Sabio already started an investigation, 0:04:55.040 --> 0:04:58.400 but it when quiet. So with increased scrutiny and you 0:04:58.440 --> 0:05:01.920 know the Supreme Court paying attention to this issue, there 0:05:01.960 --> 0:05:06.120 seems to be more urgency to finalize the investigation and 0:05:06.160 --> 0:05:10.360 come up with some sort of outcome. Now I think 0:05:10.360 --> 0:05:13.159 the Court has ordered sab to report on their finding 0:05:13.200 --> 0:05:16.359 within two months. I do believe there's some there's a 0:05:16.440 --> 0:05:18.680 chance it could drag on beyond two months, but at 0:05:18.760 --> 0:05:21.120 least the intention seems to be there and the scrutiny 0:05:21.200 --> 0:05:23.760 is there. So in your assessment, this is a good thing, 0:05:23.880 --> 0:05:27.480 not a negative for Adani and for India. Well, for Adani, 0:05:27.520 --> 0:05:29.640 it's hard to tell because obviously it depends on the 0:05:29.640 --> 0:05:34.040 outcome of the investigation, right, But for India, I do 0:05:34.120 --> 0:05:36.159 think as of now, based on what I can see, 0:05:36.360 --> 0:05:39.400 I'm looking at it more positively. Sharon A. Doney Group 0:05:39.520 --> 0:05:43.719 does have five hundred and seventy eight subsidiaries under seven 0:05:43.760 --> 0:05:47.320 listed companies. Now, the Hindenburg report mentioned that there was 0:05:47.400 --> 0:05:51.320 six thousand intercompany transactions over the last year. This must 0:05:51.360 --> 0:05:54.800 be a nightmare to analyze for a credit analyst. Um 0:05:55.160 --> 0:05:58.960 So again, this is not unusual. I guess for such 0:05:59.000 --> 0:06:03.040 a large conclus So to give you an example, under 0:06:03.160 --> 0:06:06.799 a Doney Transmission, which is the power transmission company, every 0:06:06.800 --> 0:06:08.680 time it bids for a new project, it tends to 0:06:08.720 --> 0:06:11.160 set up a new subsidiary because then you know, you 0:06:11.520 --> 0:06:14.280 have that subsidiary just focused on that project, and it's 0:06:14.279 --> 0:06:18.280 also easier for to raise funding. So that's how you 0:06:18.400 --> 0:06:20.520 end up with so many subsidiaries. And in terms of 0:06:20.560 --> 0:06:24.640 the related party transactions, even in a normal course of business. 0:06:24.680 --> 0:06:29.400 So for example, Doney Green Energy sells power to a 0:06:29.480 --> 0:06:33.719 Doney Electricity Mumbai, which distributes it in Mumbai. That's in 0:06:33.760 --> 0:06:36.440 a normal course of business, so you'd kind of expect 0:06:36.520 --> 0:06:41.279 this related party transactions. Where I guess we might have 0:06:41.480 --> 0:06:44.320 some concern from a credit perspective is in terms of 0:06:44.600 --> 0:06:48.799 related party loans. And what we've seen there, for example, 0:06:48.920 --> 0:06:51.320 is a Doney Ports. It does have this line item 0:06:51.360 --> 0:06:56.279 called intercorporate deposits, which is made to unrelated parties, but 0:06:56.520 --> 0:07:01.200 it's guaranteed by a related party. So these sort of transactions, 0:07:01.200 --> 0:07:04.640 you know, without more explanation from a business perspective, could 0:07:04.680 --> 0:07:08.480 seem a bit unusual. It's been about two months, maybe 0:07:08.520 --> 0:07:12.640 a little more since Hindenberg Research issued its initial report 0:07:12.840 --> 0:07:17.000 on a Donnie, How would you assess the way management 0:07:17.040 --> 0:07:19.320 has handled the crisis so far and the amount of 0:07:19.400 --> 0:07:22.800 damage the reporter is done. Yeah, sure tough. So from 0:07:22.840 --> 0:07:26.080 a credit market perspective, I would say the company is 0:07:26.400 --> 0:07:29.960 you know, they did issue a rebuttal very quickly, and 0:07:30.000 --> 0:07:32.880 they have lined up obviously a series of calls for 0:07:32.920 --> 0:07:36.000 their key dollarbone issuers and they are currently on the 0:07:36.040 --> 0:07:39.360 road as we speak, you know, meeting investors. So they 0:07:39.400 --> 0:07:42.400 are trying. But from a transparent se perspective, we do 0:07:42.440 --> 0:07:46.360 believe there are still some information that that is missing. 0:07:46.600 --> 0:07:50.680 So for example, they've provided that maturity profile for all 0:07:50.720 --> 0:07:53.800 the key listed companies, but as as we've come to 0:07:53.800 --> 0:07:57.560 find out, they are also promoted level debt and there's 0:07:57.800 --> 0:08:01.600 very little information on debt, and there's always concerned that 0:08:01.640 --> 0:08:04.640 when these matures would there be cash leakage from some 0:08:04.720 --> 0:08:08.240 of its operating companies to help support the promoter. So 0:08:08.400 --> 0:08:11.120 I would say that they've done some of it, but 0:08:11.360 --> 0:08:15.240 there are still questions unanswered. Do you think in this case, 0:08:15.520 --> 0:08:19.400 Adani's management has done enough to win back the confidence 0:08:19.440 --> 0:08:21.960 of foreign investors or is there more work to do 0:08:22.560 --> 0:08:25.000 as part of investing in emerging markers. I would say 0:08:25.040 --> 0:08:29.320 that investors do understand that there are risks involved and 0:08:29.360 --> 0:08:32.240 you price it in. But given just how high profile 0:08:32.280 --> 0:08:35.040 this has could become, I do think, you know, there 0:08:35.080 --> 0:08:37.400 needs to be some clarity and maybe cleaning up of 0:08:37.440 --> 0:08:41.320 some of the issues around their shareholding structure and around 0:08:41.400 --> 0:08:46.280 related party transactions. What about the auditing? The Hindenberg Research 0:08:46.320 --> 0:08:50.280 report shed light on a little known auditing firm with 0:08:50.720 --> 0:08:53.960 less than I think fifteen employees. They also mentioned that 0:08:54.000 --> 0:08:57.520 the auditors at the time were less than twenty five 0:08:57.559 --> 0:09:00.320 years old, but they signed off on the accounts. Has 0:09:00.440 --> 0:09:04.160 a Danney Group allayed some of these fees? Um? So 0:09:05.360 --> 0:09:09.880 I haven't heard anything. And you know, for the companies 0:09:09.920 --> 0:09:12.520 that we do cover, so they're bigger companies that are 0:09:12.520 --> 0:09:16.120 dollar bone issues, they are audited by you know, well 0:09:16.120 --> 0:09:20.719 known typically big four audit firms. So this auditor that 0:09:21.240 --> 0:09:23.960 the Hinden Word Research report refers to is specifically for 0:09:24.040 --> 0:09:29.480 Adani Total Guests and also the holding company financial statements, 0:09:29.520 --> 0:09:32.280 So the parent financial statements for Adanney Enterprises, although a 0:09:32.480 --> 0:09:37.840 Danny Enterprises subsidiaries are audited by better known firms. So 0:09:38.120 --> 0:09:40.679 I haven't heard anything in terms of you know, what 0:09:40.720 --> 0:09:43.800 the company is going to do to address this. But um, 0:09:44.320 --> 0:09:46.199 you know, for the other companies that we cover, it's 0:09:46.240 --> 0:09:49.720 not as major an issue now as far as Adanni 0:09:49.800 --> 0:09:51.880 Group is concerned and talk about bout the size and 0:09:51.880 --> 0:09:54.400 the quality of the auditors. I think quality of auditors 0:09:54.520 --> 0:09:57.640 is important, but I think one can't based conclusion on 0:09:57.679 --> 0:10:00.200 the size of the firm alone, because if it's think 0:10:00.240 --> 0:10:03.079 about it, many of the accounting scandals in the past 0:10:03.120 --> 0:10:06.720 beat and Ron are more recently wild card regulators or 0:10:06.720 --> 0:10:11.440 investors have blamed auditors for failure on their part, and 0:10:11.559 --> 0:10:15.439 these are all big accounting firms. So having large auditor 0:10:15.559 --> 0:10:19.480 may help companies to signal good corporate garnance to investors, 0:10:19.480 --> 0:10:24.040 but not having one shouldn't imply lack of governance. You're 0:10:24.120 --> 0:10:26.920 listening to Asia Centric. By the way, If you like 0:10:27.000 --> 0:10:30.480 what you're hearing, please subscribe or give us a rating. 0:10:30.679 --> 0:10:34.600 More stars are better. It helps other listeners find our 0:10:34.679 --> 0:10:40.280 podcast and improves our visibility. Charon Chen many in the 0:10:40.320 --> 0:10:44.079 Financial Commentary and have likened the Adani drama as Indians 0:10:44.160 --> 0:10:48.640 quote en Ron moment or its Leman moments, echoing two 0:10:48.640 --> 0:10:51.080 of the biggest corporate failures in the US of the 0:10:51.120 --> 0:10:53.839 past twenty years. Do you think those are fair comparisons? 0:10:54.679 --> 0:10:57.600 Not at this stage, given that you know, nothing is 0:10:57.640 --> 0:11:01.880 proven yet, right. Um. The other thing is also like 0:11:01.960 --> 0:11:05.720 going back, you know, to the contagion risk. I would 0:11:05.720 --> 0:11:08.920 say even in the debt market, this is being viewed 0:11:08.960 --> 0:11:13.000 in isolation in terms of a Doney specific bonds being 0:11:13.040 --> 0:11:16.640 sold off, but not so much other Indian bonds because 0:11:17.000 --> 0:11:20.400 ultimately this is a private group and so you know, 0:11:20.679 --> 0:11:24.120 um so for example, those that have similar sort of 0:11:24.200 --> 0:11:29.800 risk profile with a conglomerate issue or high promoter share pledges, 0:11:30.200 --> 0:11:32.599 those have suffered. So for example of a Danta is 0:11:32.640 --> 0:11:36.600 one of them. Um. But companies that have strong sponsors 0:11:36.640 --> 0:11:40.800 and you know, are managing their debt profile correctly and 0:11:41.559 --> 0:11:44.640 governance isn't as much of a risk have held in. 0:11:45.320 --> 0:11:47.800 Does a Doney group have enough liquidity in cash to 0:11:47.880 --> 0:11:51.840 meet the debt obligations and for how long as well? Um, 0:11:52.640 --> 0:11:57.280 I do think that immediate liquidity so dissars liquidity is 0:11:57.760 --> 0:12:00.640 not a concern because the amounts maturing, at least from 0:12:00.679 --> 0:12:02.800 what we can tell in their key listed companies are 0:12:02.840 --> 0:12:07.280 not large. And I've mentioned that you know, again the 0:12:07.840 --> 0:12:12.520 companies invest in strong assets that are cash generatives, so 0:12:13.080 --> 0:12:16.239 you would think that if they can offer these as collateral, 0:12:16.600 --> 0:12:20.079 they should be able to raise the required funds. Where 0:12:20.160 --> 0:12:24.760 we see some risk is mainly coming from refinancing as 0:12:24.760 --> 0:12:27.840 we hit into twenty twenty four, and that's mainly in 0:12:27.880 --> 0:12:31.000 a dining green energy. So the renewable company has one 0:12:31.000 --> 0:12:34.800 point two five billion dollars worth of bonds coming due 0:12:34.840 --> 0:12:40.440 next year and management has said that they're working on 0:12:40.520 --> 0:12:43.600 lining up refinancing as we speak and they expect these 0:12:43.640 --> 0:12:46.920 to be in place by the end of June. Having 0:12:46.920 --> 0:12:49.280 said that, one of the bonds, worth seven hundred and 0:12:49.280 --> 0:12:52.440 fifty million, is an unsecured bond as an it's not 0:12:52.520 --> 0:12:55.120 pledged by project assets, so that's where we see the 0:12:55.559 --> 0:12:59.839 higher risk. On top of that, according to Bloomberg data, 0:13:00.480 --> 0:13:04.480 we see there's about four billion dollars of debt which 0:13:04.559 --> 0:13:06.920 was used to fund the acquisition of Ambuja Cements and 0:13:07.040 --> 0:13:12.080 acc which they also come due next year. So that's 0:13:12.120 --> 0:13:15.720 that's a pretty large amount that needs to be refinders. 0:13:15.760 --> 0:13:18.679 But you know, obviously these cement companies are good assets 0:13:18.679 --> 0:13:23.360 and Ambujah in particular has a cash position. Nittan Adani 0:13:23.440 --> 0:13:26.719 Group responded to the Hindenburg allegations saying that this was 0:13:26.760 --> 0:13:30.040 an attack on India. Do you see this as an 0:13:30.040 --> 0:13:32.120 attack on the country or do you think this is 0:13:32.120 --> 0:13:35.000 more of an isolated issue. I think it's more of 0:13:35.040 --> 0:13:37.880 an isolated issue, and probably like it's a key learning 0:13:37.880 --> 0:13:40.960 for other companies not to respond in such a nationalistic 0:13:41.200 --> 0:13:45.559 way when a governance issues come up, because like if 0:13:45.640 --> 0:13:49.320 if they had like responded to their allegations in a 0:13:49.320 --> 0:13:53.120 more structured manner rather than bringing nationalism into the equation, 0:13:54.040 --> 0:13:57.000 maybe the scenario would have been different. So, like, because 0:13:57.160 --> 0:13:59.960 Dani is not India and India is not adanis Indian 0:14:00.120 --> 0:14:03.400 still seems to be a worldlike country by foreign investors 0:14:03.520 --> 0:14:07.280 amongst emerging markets. Do you think foreign investors see India 0:14:07.360 --> 0:14:12.600 as an alternative to investing in China given the geopolitical risks. Yeah, 0:14:12.600 --> 0:14:14.800 I think we can look at the data to answer it. 0:14:15.280 --> 0:14:17.320 First of all, if you look at the nature of 0:14:17.360 --> 0:14:21.440 the both the asset classes China and Indian equities, they 0:14:21.440 --> 0:14:24.320 are both high beta assets. Now what this means is 0:14:24.560 --> 0:14:27.840 if global markets are a X person, these two will 0:14:27.880 --> 0:14:30.360 go up one point two X and if the market 0:14:30.480 --> 0:14:33.520 is down X person, they will go down one point 0:14:33.560 --> 0:14:37.320 two X. Now, what this also means is any rational 0:14:37.400 --> 0:14:40.600 global investor should put extra dollars in these two markets 0:14:40.640 --> 0:14:43.600 together when he expects a risk on environment, and we'll 0:14:43.640 --> 0:14:46.520 pull out money from both the markets at the same 0:14:46.560 --> 0:14:50.160 time when he expects a risk of environment. Now that's 0:14:50.200 --> 0:14:53.280 a rationality argument, But then the question is our global 0:14:53.320 --> 0:14:56.280 investors actually rational? Now we can look at the foreign 0:14:56.280 --> 0:14:59.120 flows for these two markets, and what we see there 0:14:59.240 --> 0:15:03.400 is tronically foreign flows to India and China equities do 0:15:03.520 --> 0:15:08.200 show significant positive correlation. This means that global investors are 0:15:08.240 --> 0:15:11.040 investing in these two markets and pulling out money at 0:15:11.040 --> 0:15:13.600 the same time. Now, if we talk about the last 0:15:13.640 --> 0:15:17.360 two years geopolitical risk for Chinese equities, going by the 0:15:17.480 --> 0:15:20.880 usual narrative, you would have expected negative foreign flows to 0:15:20.960 --> 0:15:24.120 Chinese equities and positive flows to Indian equities, but that 0:15:24.280 --> 0:15:28.800 hasn't happened. Actually, aggregate flows in the last two years 0:15:28.840 --> 0:15:32.000 for the Chinese equities was positive and negative for the 0:15:32.040 --> 0:15:36.480 Indian equities. So maybe this narrative India versus China holds 0:15:36.520 --> 0:15:40.840 for business investments, but it's not true for portfolio decisions, 0:15:40.880 --> 0:15:43.560 at least not for now. We've talked a lot about 0:15:43.600 --> 0:15:47.280 the negative news surrounding Hindenburg Report. Let's talk about some 0:15:47.320 --> 0:15:50.000 of the positives. There are some real value in some 0:15:50.040 --> 0:15:54.560 of these companies, right, yes, certainly, I would say pretty 0:15:54.640 --> 0:15:56.640 much all the companies. I mean, if you look at 0:15:56.680 --> 0:16:01.000 the sectors that Attorney invest in, their primary really infrastructure. 0:16:01.040 --> 0:16:05.360 So we're talking about ports, airports, you know, power transmission lines, 0:16:05.440 --> 0:16:12.000 to distributions, renewable energy projects. These are all typically very stable, 0:16:12.280 --> 0:16:15.320 long term assets. And you know, over the years we've 0:16:15.320 --> 0:16:20.280 seen increasing um investor appetite to invest in these types 0:16:20.320 --> 0:16:25.120 of infrastructure assets. Taking aside the corporate governance issues, Adneys 0:16:26.120 --> 0:16:29.800 an actual business, you know, in terms of their operations, 0:16:30.080 --> 0:16:33.240 is actually well known to be very well run, you know, um. 0:16:33.520 --> 0:16:36.120 So for example, in ports, Adney Ports is basically the 0:16:36.120 --> 0:16:40.480 group's crown jewel and it's Mundra Port is basically the 0:16:40.520 --> 0:16:45.280 biggest port in India, and like Nittin suggested, Doney Ports 0:16:45.400 --> 0:16:49.440 is the market leader there and it has been gaining 0:16:49.520 --> 0:16:52.440 market share because it's well operated. So you know, the 0:16:52.440 --> 0:16:55.000 shipping companies, the shipping lines want to stop there because 0:16:55.040 --> 0:16:57.440 it's more efficient. Is the company has been investing in 0:16:57.520 --> 0:17:01.160 logistics as well, so that it takes less time and 0:17:01.280 --> 0:17:07.040 costs for these companies to transport their cargo. So you know, 0:17:07.280 --> 0:17:09.679 there's definitely a positive in terms of how they've invested 0:17:09.720 --> 0:17:12.840 in infrastructure side. It's just that unfortunately they have used 0:17:12.880 --> 0:17:15.440 quite a lot of debt to fund some of its expansion. 0:17:15.960 --> 0:17:18.520 So for they like they have played a very pivotal 0:17:18.680 --> 0:17:22.720 role in like bridging the infrastructure gap. And we also 0:17:22.760 --> 0:17:27.719 analyze like investing on infrastructure basically leads to um like 0:17:28.240 --> 0:17:31.240 almost two to three times growth in GDP over the 0:17:31.320 --> 0:17:34.280 long runs. And India is an infrastructure deficit country, so 0:17:35.160 --> 0:17:39.240 it is an important part of the Holy ecosystem. NITT 0:17:39.359 --> 0:17:42.760 and how is the Atani group viewed in India? Give 0:17:42.840 --> 0:17:48.000 us the insider's view. It's difficult to comment. I was 0:17:48.000 --> 0:17:51.640 reading a report basically, like if you visit Goat, which 0:17:51.680 --> 0:17:55.040 is the hometown of Adani, and like you will see 0:17:55.119 --> 0:17:58.240 a lot of holdings, a lot of advertisement, and a 0:17:58.240 --> 0:18:00.320 lot of work that he has done for the date 0:18:00.400 --> 0:18:02.720 as such, and he has given a lot of employment 0:18:02.800 --> 0:18:06.080 to basically the people who have benefited out of him 0:18:06.359 --> 0:18:10.320 definitely acknowledge and respect him. But on the other hand, 0:18:10.400 --> 0:18:14.240 there is another group, for example, like the Onshore Funds 0:18:14.640 --> 0:18:18.840 or basically retail investors which were not comfortable probably and 0:18:19.000 --> 0:18:22.760 never invested in those shares. So it is like it's 0:18:22.880 --> 0:18:26.600 kind of a dichotomous view. Some people respect him, some 0:18:26.680 --> 0:18:31.760 people probably like do not and try to Like there's 0:18:31.760 --> 0:18:34.359 been a lot of press reports talking about the close 0:18:34.480 --> 0:18:39.000 relationship between Attani and the Modi government. Given what's happened 0:18:39.000 --> 0:18:41.840 with the Hindenburg report and the debacle, do you think 0:18:41.880 --> 0:18:44.360 it's going to be more difficult for Attani to win 0:18:44.480 --> 0:18:48.399 more government orders. I think it's quite difficult to comment 0:18:48.480 --> 0:18:51.639 at this point of time whether they will win more contracts, 0:18:51.920 --> 0:18:55.920 but definitely, as I mentioned, like, they will definitely need 0:18:55.960 --> 0:18:58.760 to slow down their revenue growth and pay down the 0:18:58.840 --> 0:19:02.680 KPEX plans like currently they of late, they have come 0:19:02.680 --> 0:19:07.040 out with a slowdown in KPEX announcements in several of 0:19:07.040 --> 0:19:10.160 their forms. So basically, if the KPEX plans slow down, 0:19:10.520 --> 0:19:13.080 then naturally the other government contracts will go to some 0:19:13.119 --> 0:19:17.560 other party. But it's difficult to comment like any future 0:19:18.440 --> 0:19:21.359 government contracts will be awarded them or not, but it 0:19:21.440 --> 0:19:24.080 will be politically sensitive, like at this point of time 0:19:24.119 --> 0:19:26.840 to just go and award another contract to them when 0:19:26.880 --> 0:19:30.159 this news is ongoing. We've been talking a lot about 0:19:30.359 --> 0:19:35.040 Adanni Group's woes and the dustop focused on the Hindenburg report. 0:19:35.480 --> 0:19:37.159 Let's take a look on the bright side to what 0:19:37.280 --> 0:19:42.560 extent has this controversy, all this scrutiny been good for 0:19:42.680 --> 0:19:47.200 a Donnie and good for India. I think it's hard 0:19:47.240 --> 0:19:51.880 to say what's been good for Adani other than perhaps 0:19:51.920 --> 0:19:55.520 good for an investor in Adani is that transparency has 0:19:55.560 --> 0:19:59.320 actually improved for the group as a whole. So for example, 0:19:59.400 --> 0:20:03.119 the company disclosed the debt maturity for profile, the annual 0:20:03.119 --> 0:20:07.280 debt maturity profile for all its key listed companies. You know, 0:20:07.320 --> 0:20:11.520 the company has been doing investor meetings and we've made 0:20:11.560 --> 0:20:15.680 themselves more available generally to investors. So I think that 0:20:15.760 --> 0:20:19.119 would probably be the good thing. And also in the 0:20:19.160 --> 0:20:22.240 past has obviously been talks about scrutiny and Adani growing 0:20:22.280 --> 0:20:25.320 too rapidly and a lot of that being debt funded 0:20:25.359 --> 0:20:28.440 at least, you know, for example, in the renewable energy 0:20:28.600 --> 0:20:32.000 with the acquisition of the cement companies. So what we've 0:20:32.000 --> 0:20:35.480 seen also is the company is dialing back some of 0:20:35.560 --> 0:20:39.240 their growth ambitions at least in the near term. If 0:20:39.600 --> 0:20:42.280 allegations do indeed come out to be true, then they 0:20:42.359 --> 0:20:47.239 could lead to better regulatory norms and better shareholding disclosures 0:20:47.280 --> 0:20:50.080 and those kinds of things. So so it will be 0:20:50.119 --> 0:20:52.480 in the long run good for corporating India as well 0:20:53.200 --> 0:20:58.480 and good for financial markets as well. Well. The Adani 0:20:58.560 --> 0:21:01.520 Group drama is still unfolding. I'm sure we're going to 0:21:01.600 --> 0:21:03.480 hear a lot more about it in the weeks of 0:21:03.560 --> 0:21:07.520 the months to come. Kumar Galtam, Sharon Chen and Nitten 0:21:07.640 --> 0:21:11.160 Chanduka all from Singapore. It's been a pleasure having you 0:21:11.280 --> 0:21:14.800 on asia Centric. Thanks for having us, Thanks for having 0:21:14.840 --> 0:21:19.440 Thanks for having us. Asia Centric is edited by Clara Chen. 0:21:19.800 --> 0:21:23.040 I'm Tom Corbett in Hong Kong and I'm John Lee, 0:21:23.080 --> 0:21:25.360 and you've been listening to asia Centric podcast.