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The fall in the valuation of Adani Group’s 10 companies in nine days prompted the National Stock Exchange to place them under additional surveillance on Friday. NSE also included a group affiliate on this list.

The additional surveillance measures (ASM) list includes Adani Enterprises, Adani Ports & Special Economic Zone and Ambuja Cements. In phase I, traders will be required to put in 100% margin. The NSE added Monarch Networth Capital. The increase in margins under ASM is undertaken to curb excessive speculations in stocks as it reduces the leverage. The ASM framework is a consultative process between the Securities and Exchange Board of India (Sebi) and the exchanges, to enhance market integrity and safeguard interests of investors, especially in times of unprecedented volatility, as is seen in Adani group stocks for the last few days. Since Hindenburg’s devastating report was published on 25 January, shares of Monarch Networth have crashed 40%, ending at 224 apiece on Friday. US-based short seller Hindenburg faulted the Adani Group on its decision to allow Monarch handle the offer for sale of Adani Green Energy in 2019 and, recently, was among the 10 banks for the 20,000- crore secondary share sale of Adani Enterprises. Earlier this week, Adani called off the FPO.

Hindenburg claimed privately-held Adani Properties is a shareholder in Monarch and alleged conflict of interest. It has also expressed dismay over Monarch’s appointment given that it was suspended by Sebi in 2011.

“Given the importance of maintaining SEBI compliance, one would have expected the Adani Group to have chosen experienced, credible book-runners to manage the deal. Instead, Adani Green Energy chose an entity it could likely influence, if not control outright," said Hindenburg.

“This close relationship seems to pose an obvious conflict of interest"

“Why did Adani choose Monarch Networth Capital, a small firm previously suspended and sanctioned by Sebi over allegations of market manipulation, to run the offerings, rather than a large, well-respected broker"

Ahmedabad-headquartered Monarch is owned by Rakesh Shah, Gautam Adani´s brother-in-law.

The Adani Group has not denied its partial ownership in Monarch but in its response last week said that it partnered with Monarch “for their credentials and ability to tap into the retail market."

Adani also dismissed Monarch’s previous legal run-in as a “1-month suspension more than a decade ago" and said it has “no further relevance."


Note: Subsequent to the publishing of this story, Monarch has in its response said "we strongly deny that the promoters of Monarch Networth Capital are relatives of Adani."

Also, the headline of this story has been changed to reflect Monarch's response.


Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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