MSCI, Adana İletim ve Adani Total Gas şirketlerinin MSCI GIMI’nin yanı sıra ilgili MSCI Faktörü, MSCI ESG, MSCI Tematik ve MSCI Sınırlı Endekslerinden 31 Mayıs 2023 kapanışından itibaren silineceğini bildirdi.

Bu, bir dosyaya göre Çarşamba günü Adani Enterprises’ın Cumartesi günü yapılacak bir yönetim kurulu toplantısı ile fon toplama planlarını açıklamasından sonra geldi.

Adani şirketlerinin hisseleri, açığa satış firması Hindenburg Research’ün şirketleri hisse senedi manipülasyonu ve muhasebe dolandırıcılığıyla suçlamasının ardından bu yılın başlarında yaklaşık 150 milyar dolarlık bir düşüş yaşadı.

New Delhi, India – The Indian government granted an extraordinary favour to controversial tycoon Gautam Adani, boosting his coal business, documents reveal.

After Prime Minister Narendra Modi’s office had ascertained that a particular regulation handing over coal blocks to the private sector was ‘inappropriate’ and lacked transparency, his government made an exception. It allowed Adani Enterprises Limited to mine from a block holding more than 450 million tonnes of coal in one of India’s densest forest patches.

The government did not explain why the Adani Group, owned by billionaire Gautam Adani, was given an exception, documents accessed by The Reporters’ Collective (TRC), a non-profit media organisation based in India, and Al Jazeera show.

Until a recent stock market rout on allegations of accounting fraud by a US-based short seller, Adani was the third-richest person in the world.

His group was given the exception under a regulation introduced by the Modi government following a 2014 Supreme Court ruling that cancelled the allocations of 204 coal blocks. Many of the blocks had been illegally allocated to companies owned by state governments, the court found. These companies, in turn, had been handing over the lucrative business of mining to private companies at prices that were kept under wraps in secret contracts. The Adani Group got one such contract in July 2008.

The court had found all this had gone on without legislative sanction and, in its ruling, cancelled all the coal blocks and the mining contracts that had been handed out, forcing the companies to forfeit them.

But the Modi government’s decisions enabled the Adani Group, whose business fortune has risen in parallel with Modi’s political heft, to continue to mine coal, unfettered by the court ruling as well as the government’s own policy decisions that put many other private players at a disadvantage. To date, the company has mined more than 80 million tonnes of coal from the block.

Coal scam

In 2014, a new government led by Modi’s Bharatiya Janata Party (BJP) rode to power on an anticorruption wave. The previous Congress-led United Progressive Alliance (UPA) government had been caught in a swirl of news reports, auditor findings and litigation pointing to large-scale corruption and crony capitalism in two particular sectors — the allocation of airwave spectrum to telecom companies and distribution of coal blocks to private miners. The latter was dubbed “Coalgate”.

Instead of auctioning them to earn the highest possible revenue, the UPA government allocated coal mines to industries through an opaque and discretionary method, charging a minimal royalty. The Comptroller and Auditor General of India (CAG), the government account’s auditor, concluded that this modus operandi had caused a nominal loss of $22bn to the exchequer.

In his political campaigns in the lead-up to the 2014 national elections, Modi berated the UPA government, “Coal scam has darkened the face of entire nation,” he tweeted on September 13, 2012. “AICC is now an abbreviation for All India Coal Congress,” he added, twisting the abbreviation for All India Congress Committee, the formal name of the incumbent Congress party’s central decision-making body. After winning the elections, his government set out to “transparently” re-auction the coal mines.

 

Coal scam has darkened the face of entire nation. AICC is now an abbreviation for All India Coal Congress http://t.co/FCWItTXL

— Narendra Modi (@narendramodi) September 13, 2012

Our investigation, however, reveals that even the new administration allowed private corporations to continue to bypass the competitive process to corner large coal reserves. Part one of this series showed how the government allowed business conglomerate RP-Sanjiv Goenka (RPSG) group to use shell companies to undercut competition in coal auctions and regain access to a coal mine. Part two reveals how the government helped the Gautam Adani-owned group to continue its coal-scam-era deals through another route.

Bypass route

During the UPA administration, coal blocks were allocated not just to private sector firms but also to central and state government-owned companies. They in turn gave the mining rights to private companies under secret contracts at undisclosed rates. In the mining industry jargon, these contracts are called Mine Developer and Operator (MDO) contracts.

For the Adani Group, the MDO route, with its higher profit margins compared with the investment and operating cost of running the business, was a lucrative entry point into the coal business even though, technically, commercial coal mining was still prohibited at the time. Over time, the group has emerged as India’s biggest coal MDO — currently, it has nine MDO contracts for blocks holding more than 2,800 million tonnes of coal.

By 2014, the Adani Group had cornered five such contracts.

Two contracts were signed directly by BJP-ruled state-owned firms. One was signed by a Congress-ruled state government. Two others were joint ventures between different state-owned companies. In both these latter cases, one of the joint-venture partners was a firm owned by a BJP-ruled state government.

Enter the Supreme Court

Then the Supreme Court stepped in to ruin the party.

In response to a public interest litigation, India’s highest court held that most coal block allocations had been arbitrary and illegal.

It concluded that the allocation method had set up an illegal backdoor route for the mines to go into “the hands of private companies for commercial use”. It struck down 204 coal-mine leases that were at the centre of the scandal.

It concluded that the extant law permitted allocating coal blocks to central government companies but not to state government-owned companies. The 204 cancelled coal-block leases included 101 leases made to state government-owned companies. Many of them had already outsourced the mining to private companies through MDO contracts.

With the original allocations to the state governments’ companies cancelled by the court, the subsequent MDO contracts by these companies with private players were automatically annulled.

Loopholes in the fine print

The Modi government now had a clean slate to work with. The court’s order meant the government could now auction all 204 coal blocks without worrying about previous beneficiaries who had got the blocks for a song. The government promised to usher in a clean, transparent regime to exploit coal mines. “We are focusing on bringing transparency in allocation of natural resources including coal blocks,” then Home Minister Rajnath Singh said at a public event in January 2015. “We have been able to rebuild confidence and trust that is extremely important to revive investments and drive higher growth,” he said.

The federal government brought in a new law and amended existing mining laws, claiming they would ensure coal blocks are auctioned to the highest bidder and not allocated for free.

This was only half the truth. The government had left open a window of discretion in the regulations. It could choose which ones to auction and which ones to allocate to states. What the Supreme Court had termed illegal, Modi’s government gave legislative backing and empowered itself to make discretionary allocations yet again to state government-owned companies.

This was not all. For the first time, it gave explicit legislative backing to the controversial MDO contracts as well. A model contract was also prepared which bared the government’s intentions: Parts of or the entire contract could be kept away from citizens’ scrutiny, the model contract recommended. Yet again, no one would come to know the price at which the state government gave a mine to a private company.

The government’s next step was even more remarkable. And it came to help the Adani Group.

The government inserted a provision in the law allowing state governments, which were freshly allotted mines, to continue the MDO contracts that the previous owner of their mines had before the court cancelled them. The states would not have to conduct a new round of auctions to find which private player is willing to charge the least to mine the coal. The MDO contracts that had been annulled due to the Supreme Court orders could now be reinstated with the same company even if the coal blocks changed hands between state government-owned firms.

Reinstating Adani Group

This exceptional provision came in handy for a BJP-ruled state government to reinstate Adani Group companies as MDOs for two mines. In fact, one of them was the first-ever coal MDO contract signed in the country.

 

In 2007, Parsa East & Kente Basan, a coal mine with more than 450 million tonnes of coal, was allocated to Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL), a Rajasthan state-owned power company.

More than a year before it was allocated the block, the Rajasthan public sector company picked Adani Group as the partner for its joint venture — Parsa Kente Collieries Limited. Adani Group owned 74 percent of the shares of the joint venture while the state-owned firm held 26 percent.

In July 2008, this joint venture signed an MDO contract for the Parsa East & Kente Basan coal mine in Chhattisgarh’s Hasdeo Arand forests. When the MDO deal was signed, the BJP was in power in both Rajasthan, with Vasundhara Raje as Chief Minister, and in Chhattisgarh, with a Raman Singh-led government. By 2013, coal production had begun at the mine. A year later, in 2014, the Supreme Court quashed the Rajasthan state-owned firm’s mining rights for the block along with 203 other blocks nationwide.

On March 26, 2015, the block was reallocated to RRVUNL to fuel two of its thermal power stations. Under the clause in the new coal law that allowed old MDO contracts to be reinstated, the Rajasthan state-owned firm continued its coal-scam-era agreement with its Adani Group-led joint venture. Adani Enterprises, in its annual report for the financial year 2015, noted, “Pursuant to re-allotment, RRVUNL has decided to continue existing contract with PKCL [the joint venture] for development and operation of the coal block.”

The 2020 scrutiny

Government think tank NITI Aayog, on an undisclosed date, shared a secret report on mines, minerals and the coal sector with the cabinet secretary — the country’s senior-most bureaucrat who reports to the prime minister directly.

The contents of the report have never been made public, and the government has blocked access to it even under the Right to Information Act. But TRC got access to other correspondence around this report made by different arms of the government.

The report triggered an intense review of the entire MDO contracting business by the cabinet secretary and the Prime Minister’s Office (PMO).

Documents accessed by TRC for Al Jazeera using the Right To Information applications show that in March 2020, the PMO and other government departments were discussing how flawed the MDO model is.

“The practice of MDO appointment” lacks “consistency and transparency” for which it will “continue to be questioned in public domain,” then deputy secretary and current private secretary at the PMO Hardik Shah wrote to the CEO of NITI Aayog on March 4, 2020.

As private secretary, Shah, a Gujarat cadre bureaucrat, is among the five highest-ranking bureaucrats in the prime minister’s coterie of officials.

Shah quoted the cabinet secretary in the letter that “appointment of MDOs before the allotment of mineral blocks appears inappropriate and this may not be allowed in future.”

Simply put, the PMO was referring to the practice of continuing deals the Supreme Court had found illegal. It wanted the practice discontinued.

The NITI Aayog and the ministries of coal, finance, mines and steel agreed with the PMO and decided that no such contracts would be allowed in the future.

Officials from these ministries met twice in 2020 — on August 25 and October 7 — to come up with recommendations the PMO had asked for.

On “appointments of MDO before allotment of block”, the mandarins said the practice “takes cue” from the provision of the new coal law which allowed reinstating old MDO contracts. The officials pointed out that at the time there was just one such case in which the coal-scam-era MDO contract had continued — the Adani Group agreement with Rajasthan’s power generation company to mine the Parsa East & Kente Basan coal block.

 

 

They, however, recommended that the clause in the Modi government’s 2015 coal law, which helped the Adani Group, should not be changed. Instead, they decided that a clause to bar the revival of old MDO contracts should be added in future agreements that state government-owned firms would sign when they are reallotted the mines. This would ensure that the Adani Group’s coal-scam-era MDO deals remained untouched.

They gave no reason for not recommending an amendment to the clause that allowed reinstating old MDO contracts.

Meanwhile, to address the PMO’s concern over a ‘lack of transparency’, the officials came up with a rather cosmetic solution. The officials recommended that the word “transparent” should be inserted before the sentence “competitive bidding process” in the Coal Block Allocation Rules of 2017, which state that “selection of new MDOs will be through competitive bidding process”.

The Adani Group was given exceptional leeway.

In response to a detailed questionnaire sent by TRC and Al Jazeera, an Adani Group spokesperson said that all contracts were awarded through a transparent and competitive bidding process in accordance with all applicable laws and that any concerns about the process should be directed to the relevant authorities. The full response of the Adani Group can be accessed here. The coal ministry, the PMO and NITI Aayog did not respond to our queries.

Another exception

TRC filed a Right to Information request with the Ministry of Coal asking which companies had got the blocks under this special provision. The ministry did not list another block the Rajasthan state government had handed over to the Adani Group — Parsa. It did not need to because the Vasundhara Raje-led BJP government in Rajasthan had used yet another technical excuse to give the block to the group.

The Parsa block, adjacent to Parsa East & Kente Basan — and with more than 200 million tonnes of mineable coal — was originally allotted on August 2, 2006, to Chhattisgarh State Power Generation Company Limited. This firm is owned by the government of Chhattisgarh, which at the time was governed by the BJP. In 2010, this state-owned firm formed a joint venture with the Adani Group. The joint venture would serve as an MDO for the block.

In 2014, the Supreme Court quashed this allocation of the Parsa block along with the 203 other mines and a year later, the Parsa block was up for grabs. Adani Enterprises recommended to the Rajasthan power supply firm that it apply for the allocation of the block.

It was “on the basis of this recommendation” and Rajasthan’s “coal requirement” for its “various thermal power plants” that the state government-owned company applied for allocation of the Parsa block, according to details in the MDO contract.

By March 2015, the Rajasthan government-owned firm had bagged the block. This time around too, the BJP was in power in both Rajasthan and Chhattisgarh.

Without a new auction — contrary to what the PMO itself had said — it appointed its Adani Group-led joint venture as the MDO for the block. With this, the group continued as MDO for the coal block even as the block itself changed hands from one state-run firm to another.

Aftermath

Until March 2021, the Adani Group remained the sole beneficiary of the exceptional clause. The top bureaucrats in the Modi government allowed it despite admitting it was “inappropriate”.

Though the bureaucrats had decided in October 2020 that no other old MDO contracts would be revived, except for the one already allowed for the Adani Group, the decision was undone five months later by another BJP-ruled state. In March 2021, the Karnataka government revived another coal-scam-period MDO contract for a mine reallocated to its power generation company Karnataka Power Corporation in favour of the Kolkata-based private firm EMTA.

In this case though, the federal government had washed its hands of any responsibility and allowed the state to take the call. This was despite the ongoing internal review of MDO deals in the country. “Ministry of Coal has no role to play in the novation of prior contracts … It’s the sole decision to be taken by the state government/KPCL,” the ministry had written to the Karnataka government in June 2020, eight months before the decision to revive the EMTA MDO. EMTA did not respond to a detailed questionnaire sent by TRC and Al Jazeera.

Shreegireesh Jalihal and Kumar Sambhav are members of The Reporters’ Collective.

India’s home minister Amit Shah makes comments after ruling party accused of favouritism towards embattled conglomerate.

Indian Prime Minister Narendra Modi’s party has “nothing to hide or be afraid of” on the controversy over the Adani group, the home minister has said, responding to opposition allegations of favouring the conglomerate attacked by an American short seller.

Led by billionaire Gautam Adani, the business house’s seven listed companies bearing his name have together lost about $120bn in market value since a January 24 report by Hindenburg Research alleged improper use of offshore tax havens and stock manipulation. The Adani group has denied the allegations and threatened legal action against Hindenburg.

“The Supreme Court has taken cognisance of the matter. As a minister, if the Supreme Court is seized of the matter it is not right for me to comment,” Amit Shah, widely considered the most powerful politician in India after Modi, told the ANI news agency.

“But in this, there is nothing for the BJP to hide and nothing to be afraid of,” Shah added, referring to the ruling Bharatiya Janata Party (BJP).

Shares of Adani Enterprises, the group’s flagship, fell nearly 4 percent in early trade. The company, which pulled a $2.5bn share sale earlier this month after the stock rout, will announce quarterly results later in the day.

India’s Economic Times daily reported on Tuesday that Adani group executives had been holding negotiations since last week with Abu Dhabi’s International Holding Company (IHC) for capital infusion into Adani Enterprises or other group entities.

Adani and IHC did not immediately respond to requests seeking comment.

Adani Group sought to reassure investors on Monday, saying it had strong cashflows and its business plans were fully funded, as an Indian regulator confirmed it was investigating a critical report by a short-seller that has battered the group’s stocks.

Led by billionaire businessman Gautam Adani, the group’s seven listed stocks have together lost about $120bn in market value since a January 24 report by United States-based short-seller Hindenburg Research accused it of improper use of offshore tax havens and stock manipulation, allegations the group has denied.

The turmoil continued on Monday, with shares in the listed companies extending their losses.

Seeking to calm investors, the conglomerate in a statement to the Reuters news agency said the balance sheet of each of its independent portfolio companies was “very healthy”, adding it had secure assets and strong cashflows, with its business plans “fully funded”.

“We are confident in the continued ability of our portfolio to deliver superior returns to shareholders,” Adani Group said in the emailed statement.

Bloomberg News reported on Monday the group had halved its revenue growth target and planned to scale down capital spending. A company spokesperson told Reuters earlier in the day the report was “baseless, speculative”, without elaborating.

On Monday Reuters news agency reported citing unnamed sources that the group had appointed accountancy firm Grant Thornton for independent audits of some of its companies in a bid to discredit claims by Hindenburg. The appointment marks the first major effort by Adani Group to defend itself.

The Adani crisis has sparked worries of financial contagion in India, protests in parliament where legislators have demanded an investigation, ratings outlook downgrades of some Adani units, and cast a shadow on the group’s capital raising plans. Gautam Adani has also lost his crown as Asia’s richest person.

Adani Group’s statement said, “once the current market stabilises, each entity will review its own capital market strategy.”

Regulator probe

The Securities and Exchange Board of India (SEBI) has been probing the market rout, including examining trade patterns and any potential irregularities in the $2.5bn share sale of flagship company Adani Enterprises that the Adani group was forced to cancel due to the stock’s plunge, Reuters has previously reported.

SEBI confirmed the existence of the investigation for the first time in a Supreme Court filing on Monday.

“SEBI is already enquiring into both the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report,” the regulator said in the filing seen by Reuters, adding the matter was in early stages of examination.

During a court hearing on Monday where the Supreme Court heard public interest petitions that raise concerns about steep investor losses, Indian Solicitor General Tushar Mehta, arguing on behalf of the government and SEBI, said there was no objection if a panel was set up to examine protection mechanisms for investors. The judges told him to come back with the remit of such a panel and scheduled a further hearing for Friday.

SEBI is set to brief federal finance ministry officials on February 15 on its investigation into the shelved share sale, two sources told Reuters on Monday. SEBI and the finance ministry did not respond immediately to Reuters’s requests for comment.

Attempts to ‘reassure investors’

Last week, Moody’s downgraded the ratings outlook for some Adani companies, while index provider MSCI said it would cut the weightings of some in its stock indexes.

On Monday, all stocks of the Adani group were under pressure. Adani Enterprises fell 7 percent, while Adani Total Gas, Adani Power and Adani Transmission lost 5 percent each.

Adani Total, a joint venture with France’s TotalEnergies, has lost 70 percent since the Hindenburg report, while Adani Enterprises is down 50 percent.

Since the Hindenburg report’s release, Adani Group has prepaid some of its $25bn debt and pledged to independently review the short-seller’s claims, but the carnage in its securities has continued.

“The effects of management’s attempts to reassure investors will take at least three to six months to start reflecting in share prices. Price damage has been significant,” said Avinash Gorakshakar, head of research at Profitmart Securities.

In Mumbai, approximately 100 political workers and activists of the opposition Communist Party of India marched, shouting anti-Adani slogans and holding posters with cartoons of Adani and Prime Minister Narendra Modi.

Opposition critics accuse Modi’s government of giving undue favours to the Adani Group. The government and Adani both deny excessively close ties.

“The effect of our protests is visible as Adani shares continue to fall,” Feroze Mithiborwala, one of the protesters, said.

In recent days, concerns have also arisen about the exposure of Indian and foreign lenders to the Adani Group. In its rebuttal of Hindenburg’s allegations, the conglomerate had pointed to its international banking relationships as a sign of its strength.

Singapore’s DBS Group said on Monday it had a 1.3 billion Singapore dollars ($979m) exposure to Adani group companies, out of which 1 billion Singapore dollars ($756m) was to finance its cement business. DBS said it was not concerned about its exposure to the group.

The US-based stock index complier’s cut includes Adani Enterprises, the flagship firm of the group led by Indian billionaire Gautam Adani.

The United States-based stock index complier MSCI says it will cut the weightings of four Adani Group companies, including its flagship firm Adani Enterprises, in its indexes after reassessing the number of shares freely traded.

The move comes in the wake of a January 24 report by the US short-seller Hindenburg Research, which accused the Indian conglomerate of improper use of offshore tax havens and stock manipulation. The group has denied any wrongdoing.

The Hindenburg report has plunged the group, led by billionaire Gautam Adani, into crisis, wiping some $110bn off the value of its main seven listed firms.

In addition to Adani Enterprises – the group’s coal-miner-cum-incubator for new projects, MSCI also plans to cut the weightings for Adani Total Gas – a venture with France’s TotalEnergies and Adani Transmission, a power transmission company.

It will also reduce the weighting of ACC, a leading Indian cement company the Adani Group acquired from Holcim last year and which is not one of the group’s main seven listed firms.

Adani Group did not immediately respond to a request for comment from Reuters news agency on Friday.

The four companies had a combined 0.4 percent weighting in the MSCI emerging markets index as of January 30. The changes come into effect on March 1.

“The lower free float will require passive investors to sell stock to reduce their tracking error with the index,” said Brian Freitas, a Periscope Analytics analyst who publishes on Smartkarma.

“There could be selling from active investors before that as they try to sell before the passives.”

Allegations of stock market manipulation and fraud have halved the net worth of Indian tycoon Gautam Adani, one of the wealthiest people in the world, in less than two weeks and wiped more than $110bn from his listed firms in India.

With investor confidence shaken, legislators have demanded an investigation into his businesses. Here’s a look at who Adani is, what concerns have been raised and what has happened since.

Who is Gautam Adani?

He is the founder and chairman of the Adani Group, one of the largest business conglomerates in India. A native of Gujarat — the same state where India’s Prime Minister Narendra Modi is from — Adani, 60, is a college dropout. He walked away from his father’s textile shop to set up a commodities trading business in 1988, his entry into the world of business.

Forbes magazine ranked Adani as the third-richest person in the world. But a recent stock rout has caused his fortune to slip, as he faces allegations of stock manipulation and debt concerns by US-based short-seller Hindenburg Research.

What sectors does the Adani Group operate in?

The group has interests in ports, airports, gas distribution, green energy, data centres, agri logistics, edible oil, and power generation and transmission, among others. It reported revenues of $23bn in the most recent financial year, ending in March 2022.

The group is India’s biggest airport operator and also controls the Mundra Port in Adani’s home state, the country’s largest private port. Within this umbrella of businesses, seven firms are listed on the Indian stock exchanges. The Adani Group also owns a controversial coal mine in Australia, the Carmichael mine, which has been a lightning rod for climate change activists.

Over the years, the group has grown through acquisitions and collaborations. Most recently, in January, just days before the recent allegations, it led the consortium that bought Israel’s Haifa port. Last year, in June, French giant TotalEnergies SE and the Adani Group agreed to invest $5bn to produce green hydrogen and related products in India. In May, Adani became the second-largest cement producer in India after purchasing the Swiss firm Holcim’s India assets for $10.5bn.

Why is Adani’s rise controversial?

Adani’s rise has been meteoric and has benefitted from the support of Prime Minister Modi. Their ties date back to the days when Modi was the chief minister of Gujarat and Adani got land at cheap prices.

Claims of cronyism have followed Adani as he has picked up assets like ports, airport contracts and coal mines across the country, becoming one of the biggest and most powerful businessmen in the country in a very short span of time.

According to data from Forbes, Adani had a net worth of $2.8bn in 2014, just before the national elections that vaulted Modi into the role of prime minister. That wealth had catapulted to $126.4bn until the Hindenburg Research report on January 24 sent his business into crisis.

What is Hindenburg Research and what does its report say?

Hindenburg Research is a US-based forensic financial research firm that analyses the equity, credit and derivative offerings of companies. It looks for corporate wrongdoings and then places short-term bets against them.

The firm has alleged that the Adani Group has engaged in a “brazen stock manipulation and accounting fraud scheme over the course of decades”.

Hindenburg Research based its assessment on a two-year investigation during which it says it reviewed thousands of documents, conducted site visits in almost half a dozen countries, and spoke with dozens of individuals, including former senior executives of the Adani Group.

Here are some concerns the short seller has raised:

• Key listed Adani companies have “substantial debt”, and some have pledged shares of their stock for loans. Five of seven key listed companies have reported “current ratios” below 1, indicating near-term liquidity pressure.
• The Adani Group uses a web of firms in tax havens to inflate revenue and stock prices and also provide cushioning to capital balances in order to make listed entities appear more creditworthy.
• Offshore shells and funds tied to the Adani Group comprise many of the largest “public”, non-promoter holders of Adani stock.
• The group had “virtually non-existent financial controls” and listed Adani businesses have seen sustained turnover in the role of the chief financial officer (CFO) — including its flagship company, Adani Enterprises, which has had five CFOs over eight years, a red flag for accounting issues.
• The independent auditor for Adani Enterprises and Adani Total Gas is a tiny firm called Shah Dhandaria, which has no current website, four partners and 11 employees. The Hindenburg report said it “hardly seems capable of complex audit work”. The audit partners at Shah Dhandharia, who respectively signed off on the annual audits for Adani Enterprises and Adani Total Gas, were as young as 24 and 23 years old when they started. “They were essentially fresh out of school, hardly in a position to scrutinize and hold to account the financials of some of the largest companies in the country, run by one of its most powerful individuals,” the report said.
• The report alleged that Adani family members cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the United Arab Emirates and several Caribbean islands, generating forged import/export documentation in an apparent effort to spur fake or illegitimate turnover and siphon money from the listed companies. It also cited previous fraud investigations by the Indian government, which have alleged money laundering, theft of taxpayer funds and corruption, totalling an estimated $17bn.

What has Adani said about the allegations?

The Adani Group said the report was issued with a “mala fide [bad faith] intention” to damage its reputation, days before the group was set to hold a public secondary share sale to raise $2.5bn, the largest such sale in the country. The Adani Group has alleged that the report’s “principal objective” was to derail the share offer.

What has happened since the report came out?

Adani’s secondary share sale was fully subscribed, but in a shocking reversal, the group called it off, marking a stunning setback for founder Gautam Adani and sending his stocks plunging further. About $112bn have been shaved collectively off the group’s various listed firms so far, taking Adani’s personal wealth down as well.

While calling off the secondary share sale, Adani said the group will review its capital market strategy once the markets stabilise.

It is not clear when that will happen as the group’s stocks continue to nosedive. The stock market rout triggered a series of credit rating warnings from the agency Moody’s, which says that the group may struggle to raise capital. The market index S&P has also cut its credit outlook for two Adani Group companies, raising fears of contagion for the rest of the stock market.

In the meantime, legislators from India’s main opposition parties have kicked off protests at some state-run companies with ties to the Adani Group firms and have demanded an investigation into the group.

What next?

The Indian markets regulator is examining the crash in shares as well as probing for any irregularities in the $2.5bn share sale, the Reuters news agency has reported.

To calm investors’ nerves, the Adani Group on Monday made a prepayment of $1.11bn towards loans ahead of their maturity in 2024, releasing shares that had been pledged by the family as collateral. But it is too soon to say how far that step will go in assuaging investor concerns.

While Adani’s net worth has tanked more than half to $61.7bn in less than two weeks, he is still one of the most powerful people in the world, with vast businesses in key sectors in India, employing more than 23,000 people. It is unlikely that he will go away anytime soon.

Seven listed Adani Group firms see a sell-off worth $112bn in under two weeks as the opposition widens protests.

Legislators of India’s main opposition party have kicked off protests at some state-run companies over the crisis at Adani Group, whose seven listed firms saw another sell-off that drove their market loss to $112bn in less than two weeks.

Members of the Congress party on Monday protested outside several offices of state-owned insurer Life Insurance Corporation (LIC) and the State Bank of India (SBI), both of which have exposure to Adani Group companies.

At one of the protest sites in Mumbai, people held up banners with the words “Save SBI”, television footage showed.

The crisis was triggered by United States-based short-seller Hindenburg Research’s January 24 report that accused the Adani Group of stock manipulation, unsustainable debt and use of tax havens.

The Adani Group, one of India’s top conglomerates, has rejected the criticism and denied wrongdoing in detailed rebuttals, but that has failed to arrest the unabated fall in its shares.

In the brutal fallout of the Hindenburg report, Adani Group flagship company Adani Enterprises Ltd was forced to abandon a $2.5bn share sale last week, and Group chairman Gautam Adani lost his crown as Asia’s richest person and slipped down the global rankings of the wealthy.

Gautam Adani and India’s Prime Minister Narendra Modi are from the same state. Adani has denied allegations by Modi’s opponents that he had benefitted from their close ties, and Modi’s government has denied allegations of favouring Adani.

As Adani shares spiralled lower and cast a pall over Indian markets last week, opposition legislators disrupted parliament proceedings on Monday and demanded an inquiry.

Credit ratings warnings

The stock market rout triggered a series of credit ratings warnings on Friday with Moody’s saying the Group may struggle to raise capital, and S&P cutting its outlook on two Group companies.

Even attempts by regulators and the government to calm spooked investors do not appear to be working.

The Reserve Bank of India said on Friday the country’s banking system remains resilient and stable. The next day, India’s market regulator said the country’s financial markets remain stable and continue to function in a transparent and efficient manner.

SBI said on Friday it was not concerned about the exposure to the Adani Group, but further financing to its projects would be “evaluated on its own merit”.

India’s divestment secretary Tuhin Kanta Pandey told Reuters news agency on Friday that LIC shareholders and customers should not be concerned about its exposure to the Adani Group.

LIC has a 4.23 percent equity stake in the flagship Adani Enterprises, while its other exposures include a 9.14 percent stake in Adani Ports and Special Economic Zone, Reuters said.

Shares of Adani Enterprises, which before the rout gained more than 1,000 percent in five years, sank 9.6 percent on Monday, taking its market capitalisation losses to nearly $28bn since the release of the report.

Adani Transmission Ltd dropped 10 percent, while Adani Green Energy Ltd, Adani Total Gas Ltd, Adani Power, and Adani Wilmar fell roughly 5 percent.

Adani Ports was the only stock to buck the trend, rising 1.2 percent.

Financial contagion fears spread in India on Friday as Adani Group’s crisis worsened, with ratings agency Moody’s warning the conglomerate may struggle to raise capital and S&P cutting the outlook on two of its businesses.

Chaotic scenes in both houses of India’s parliament led to their adjournment on Friday as some legislators demanded an inquiry after a dramatic meltdown in the stock market values of Indian billionaire Gautam Adani’s companies.

The crisis was triggered by a Hindenburg Research report last week in which the United States-based short-seller accused Adani Group of stock manipulation and unsustainable debt.

Adani Group, one of India’s top conglomerates, has rejected the criticism and denied wrongdoing in detailed rebuttals but that has failed to arrest the unabated fall in its shares.

In the latest sign of the crisis widening, India’s Ministry of Corporate Affairs has begun a preliminary review of Adani Group’s financial statements and other regulatory submissions made over the years, two government officials told the Reuters news agency.

Although shares in Adani companies recovered after sharp falls earlier on Friday, the seven listed firms have still lost more than $100bn – about half their market value – since Hindenburg published its report on January 24.

Moody’s warned the share plunge could hit the Adani Group’s ability to raise capital, although fellow credit ratings agency Fitch saw no immediate effect on its ratings.

“These adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years. We recognise that a portion of the capex is deferrable,” Moody’s said in a statement.

For Adani, a former school drop-out from Gujarat, the western home state of Indian Prime Minister Narendra Modi, the crisis presents the biggest reputational and business challenge of his life as his firm struggles to assuage investor concerns.

Amid fears the turmoil could spill over into the broader financial system, some Indian politicians have called for a wider investigation and sources have told Reuters the central bank has asked lenders for details of exposure to the group.

“Contagion concerns are widening, but still limited to the banking sector,” Charu Chanana, a market strategist with Saxo Markets in Singapore, said on Friday.

India’s Reserve Bank said the country’s banking system remained resilient and stable. The State Bank of India said it was not concerned about the exposure to Adani Group but further financing to its projects would be “evaluated on its own merit”.

Adani Enterprises shares closed 1.4 percent higher after earlier slumping 35 percent to hit their lowest since March 2021. That low took its losses to nearly $33.6bn since last week, a 70 percent fall.

Shares fell by 5 percent in Adani Total Gas, a joint venture with France’s TotalEnergies, which said its exposure to Adani companies was limited.

Adani Ports and Special Economic Zone was up 8 percent, while Adani Transmission and Adani Green Energy were both down 10 percent.

“There is a risk that investor concerns about the group’s governance and disclosures are larger than we have currently factored into our ratings,” S&P said as it cut its outlook on Adani Ports and Adani Electricity to negative from stable.

India’s divestment secretary Tuhin Kanta Pandey told Reuters that Life Insurance Corp (LIC) shareholders and customers should not be concerned about its exposure to the Adani Group.

State-run LIC has a 4.23 percent stake in the flagship Adani Enterprises, while its other exposures include a 9.14 percent stake in Adani Ports.

‘One instance’

Adani, 60, has in recent years forged partnerships with, and attracted investment from, foreign giants as he pursued global expansion in industries from ports to power.

The market and financial crisis mean foreign investors, many already underweight on India as they consider its stock market overpriced, are reducing exposure.

“One instance, however much talked about globally it may be … is not going to be indicative of how well Indian financial markets are governed,” India’s finance minister, Nirmala Sitharaman, told Network18 when asked about the market weakness.

Hindenburg’s report said key listed Adani companies had “substantial debt” and shares in the seven listed firms had a downside of 85 percent due to what it called sky-high valuations.

The Adani Group has called the report baseless and said over the past decade, its companies have “consistently de-levered”.

The listed Adani firms now have a combined market value of $107.5bn, versus $218bn before the report.

That has forced Adani to cede the crown of Asia’s richest person to Indian rival Mukesh Ambani of Reliance Industries Ltd, while Adani has slid to 17th in Forbes’s list of the world’s wealthiest people.

He had ranked third, behind Elon Musk and Bernard Arnault.

The news network’s takeover has raised fears that one of the country’s last bastions of free press is under threat.

Indian billionaire Gautam Adani’s conglomerate has raised its stake in New Delhi Television Ltd (NDTV) to more than 37 percent through an open offer, making it the biggest shareholder of one of the country’s most popular news networks.

Although Adani’s group, which raised its stake on Monday, was looking to take another 26 percent stake in NDTV, the open offer attracted bids for just 5.3 million shares, translating to an 8.3 percent interest in the company.

Last week, Adani acquired a stake of about 29.2 percent in NDTV by buying a company backed by the television network’s founders, Radhika Roy and Prannoy Roy, who have a 32.3 percent stake in NDTV.

The ports-to-energy conglomerate’s takeover of NDTV has raised fears among some journalists that one of the country’s last bastions of free media is under threat.

Soon after Adani’s acquisition of NDTV’s founder entity, Ravish Kumar, a senior executive editor of NDTV, resigned.

Adani, however, has said that he sees the takeover of NDTV as a “responsibility” rather than a business opportunity, adding that he has invited Prannoy Roy to remain as chair when the acquisition is completed.

In the open offer that concluded Monday, corporate investors tendered 3.9 million shares, while retail investors offered to sell over 706,000 shares. It was not immediately clear who the participants were.

Adani had offered to buy NDTV shares at 294 rupees in the open offer, which represents a 25 percent discount to Monday’s closing price.

While a fully successful open offer would have meant Adani would have owned a majority stake in NDTV, the 37.4 percent stake still makes him the single largest shareholder, said Shriram Subramanian, managing director of Bengaluru-based InGovern Research Services, a corporate governance advisory firm.

“With the resulting shareholding, they [Adani] can still seek control of the board by reconstituting it. They can propose their own set of directors and removal of current directors,” Subramanian said.

Adani had unveiled plans late in August to acquire a majority stake in NDTV, but faced stiff opposition from the news network that said the billionaire’s bid was executed without any consent from the NDTV founders.

After trying unsuccessfully to block the takeover, citing regulatory restrictions on moving shares, the entity backed by the NDTV founders transferred their entire shareholding to Adani last week.

Swiss building-materials firm Holcim Ltd. agreed to sell its Indian operations to local billionaire Gautam Adani, currently the richest person in Asia, another step in Chief Executive Officer Jan Jenisch’s pivot away from traditional cement.

The company will sell its 63% stake in Mumbai-listed Ambuja Cements Ltd. to Adani Group, it said in a statement Sunday. Adani said it plans to spend about $10.5 billion on the stake purchases and open offer consideration for Ambuja and related entities.

As part of the deal, Adani will inherit Ambuja’s controlling stake in another publicly traded cement producer, ACC Ltd., and buy Holcim’s direct 4.5% holding in the unit. Holcim expects to receive 6.4 billion Swiss francs ($6.4 billion) of cash proceeds from the sale, according to the statement.

“We have quite a list of businesses we would like to acquire, so I think we can put this money here very well to use,” Jenisch said in an interview on Sunday. “At the moment, we’re working on more than 10 deals.”

Jenisch, who joined Holcim in 2017 from Sika AG, has been selling non-core cement businesses and buying new construction companies to benefit from rising demand for energy efficient buildings. As part of the strategy to expand the so-called solutions and products division, he has spent about $5 billion for acquisitions including Malarkey Roofing Products in December and Firestone Building Products in early 2021.

The 55-year-old German, has been cleaning up the company after the messy mega merger of Holcim and France’s Lafarge SA in 2015. Jenisch divested a Brazilian unit for $1 billion in September and Asian businesses such as Holcim Indonesia in 2019.

Holcim’s sale of its Indian business — which is subject to local regulatory approvals — is expected to close in the second half of 2022, helped by the fact that Adani doesn’t have sizable overlap. The company began reviewing new asset sales over the last year after the roofing acquisitions, and concluded negotiations with a handful of potential Indian buyers in about three months, Jenisch said.

‘Position of Strength’

“That’s something important to us that we have a strong balance sheet,” he said in the interview, adding that quick completion, the right price and good fit were key to choosing the winning bidder. “It’s always wise to be in a position of strength and have the opportunity to realize transactions and not to think about, oh, how can I raise this money.”

For Adani, the deal gives Asia’s richest person a foothold in the subcontinent’s fragmented cement sector. His group beat out other local companies including JSW Group, according to people familiar with the matter. Bloomberg News previously reported that Adani Group was in advanced talks with Holcim.

Adani Group is offering 385 rupees per share for Ambuja Cements, a 7.2% premium to Friday’s closing price, according to Sunday’s statement. It will pay 2,300 rupees per share for ACC.

Shares in Ambuja Cements rose as much as 3.5% in early Monday trading in Mumbai, while ACC advanced as much as 7%.

The conglomerate has been moving beyond its core business of operating ports, power plants, coal mines and renewable energy and into areas like data centers, airports, digital services, retail and media.

Asia’s Richest Man Is Said to Scout for Indian Media Assets

A first-generation entrepreneur with a net worth of about $100 billion, according to the Bloomberg Billionaires Index, Adani has been looking to transform his company into a multi-sector juggernaut like Mukesh Ambani’s Reliance Industries Ltd. Adani overtook Ambani as Asia — and India’s — richest man earlier this year.

Read more: Adani Joins Musk, Bezos in Exclusive $100 Billion Club

Adani’s Motivation

The deal for Ambuja will transform Adani Group into a sizable player in the cement sector. Founded in 1983, Ambuja has a cement capacity of 31 million metric tons, and has six integrated manufacturing plants and eight cement grinding units in India, its website shows.

“Our move into the cement business is yet another validation of our belief in our nation’s growth story,” Adani, chairman of his namesake group, said in Sunday’s statement.

Adani Group’s flagship firm Adani Enterprises Ltd. has two cement subsidiaries. Adani Cementation Ltd. is planning to build an integrated facility in the state of Gujarat, according to a compliance report in November. The group established Adani Cement Industries Ltd. in June 2021.

Barclays Plc, Deutsche Bank AG and Standard Chartered Plc worked with Adani on the deal. Holcim led the transaction with its internal deal team supported by BNP Paribas SA, JPMorgan Chase & Co. and Perella Weinberg Partners.