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DNA Explainer: Real reason behind massive fall in shares of Adani Group companies

The NSDL website showed that Albula Investment Fund, Cresta Fund, and APMS Investment Fund showed up in the category of frozen accounts.

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DNA Explainer: Real reason behind massive fall in shares of Adani Group companies
Adani Group of companies (Image Source: IANS)
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For the Adani Group, it was a black Monday with shares of the Group of companies falling sharply after the National Securities Depository Ltd (NSDL) froze the accounts of three foreign funds that own sizeable stakes in Adani Group of companies.

The NSDL website showed that Albula Investment Fund, Cresta Fund, and APMS Investment Fund showed up in the category of frozen accounts which together own shares worth Rs 43,500 crore of some of the group companies. Most Adani Group stocks extended losses on Tuesday, with three counters hitting their lower circuit limits.

Adani Total Gas fell 5% to Rs 1,544.55, Adani Green Energy by 5% to Rs 1,165.35, Adani Transmission by 5% to Rs 1,517.25, Adani Power by 5% to Rs 140.90, and Adani Enterprises by 11.28% to Rs 1,420.80 as of 11.45 IST. Adani Green was the only group stock trading higher, up 1% at Rs 1,189.90.

On Tuesday, Adani Group said in a statement that some Demat accounts are in 'Suspended for Debit' status due to a SEBI order issued on June 16, 2016.

What is the issue?

The fall in shares was triggered by reports that NSDL had frozen the accounts of three foreign funds that hold around USD 6 billion worth of stock in Adani Group of companies.

According to a circular issued by market regulator SEBI, all overseas investors have to furnish details of their end-beneficiaries and sources of funds.

The main issue is whether such investments have flouted the Prevention of Money Laundering Act (PMLA) rules.

SEBI had earlier said that FPIs have to comply with the beneficial ownership criterion under PMLA provisions, and should be made applicable for the purpose of know-your-customer (KYC).

Worth of Adani Group of Companies

The market capitalisation of Adani Group shares was Rs 9.5 lakh crore until last Friday.

Adani Port shares have surged by 145% in the last one year.

Adani Transmission shot up by 697%, Adani Green Energy by 280%, Adani Power by 310%, and Adani Enterprises by 906%.

Adani Total Gas shares moved up from Rs 125 to Rs 1544.55 in the last 12 months.

As the promoter holds a sizeable stake in Adani companies, promoter wealth has skyrocketed accordingly.

The promoter holds nearly 75% in Adani Transmission, Adani Power, and Adani Enterprises.

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