EPFO continues investment in 2 Adani companies despite depleted value
What's the story
India's largest retirement fund, the Employees' Provident Fund Organization (EPFO), has continued its investment in Adani Enterprises and Adani Ports and Special Economic Zone Limited despite the conglomerate's recent market rout, reports said. The investment will continue until September unless the EPFO trust—which manages the savings of 27.73 crore formal-sector employees—decides to withdraw its funds from the conglomerate during its two-day meeting beginning Monday.
Context
Why does this story matter?
Previously, other central government-controlled corporations, such as the Life Insurance Corporation and the State Bank of India, drew public ire after it was revealed that they had exposure to the Adani Group's companies. In this regard, the EPFO's exposure to the Adani Group comes as a surprise amid speculation that PM Narendra Modi's government is illegally propping up the conglomerate with public funds.
EPFO
EPFO invests 15% into ETFs
The EPFO is a public corpus run by a trust under the Union Labor Ministry. The trust administers the mandatory provident fund and a pension scheme for all those registered under the scheme. It reportedly invests 15% of its corpus into exchange-traded funds (ETFs) linked to market indices such as the Sensex and Nifty 50.
Investment
EPFO's investment in ETFs was at Rs. 1.57 lakh crore
As of March 2022, the EPFO had invested Rs. 1.57 lakh crore in ETFs and an additional Rs. 8,000 crore was invested in the financial year 2022-23, as reported by The Hindu. Meanwhile, the retirement fund body has allocated 85% of its corporate investments to exchange-traded funds that track the Nifty 50.
Details
Adani Enterprises fell by 49%, Adani Ports 19% since 2022
Though the trustees of the EPFO said they were unaware of the fund's exposure to the Adani companies, the investments are likely to have diminished. As of Friday, Adani Enterprises had fallen by over 49% from the price level at which it was included in the Nifty 50 in September 2022. Adani Ports has fallen by over 19% since the beginning of 2022.
Devaluation
Adani Group lost $150 billion in five weeks
On January 24, US-based Hindenburg Research released a report on Adani Group, just days before the conglomerate's follow-on public offer (FPO), leading to its withdrawal. In just five weeks, it wiped out more than $150B from the conglomerate's market value. The Adani Group and the ruling Bharatiya Janata Party (BJP) called the report a concerted attack on India's rise on the global economic platform.