0

CASE STUDY | ADANI ENTERPRISE

LIMITED

Report guidelines:

 Critically prepare a research report on Adani Enterprise Ltd.  The report must
be constructed around the headings mentioned below. Please note that the
report size should not exceed 8 pages.
 Headings should be
o Brief Background of the group
o Brief background of the company
o Key promoter/ CEO
o Political exposure
o Regulatory, Compliance, Enforcement & other significant red flags
o Any significant litigation

Table of Contents
REQUEST..................................................................................................................................................- 1 -

ADANI ENTERPRISES LTD..................................................................................................................- 2 -

BACKGROUND | ADANI GROUP................................................................................................................- 2 -

BACKGROUND | ADANI ENTERPRISES LTD...............................................................................................- 2 -

KEY PROMOTER/CEO | ADANI ENTERPRISES LTD...................................................................................- 3 -

POLITICAL EXPOSURE..............................................................................................................................- 4 -

REGULATORY, COMPLIANCE, ENFORCEMENT & OTHER SIGNIFICANT RED FLAGS................................- 6 -

LITIGATION...............................................................................................................................................- 7 -

Adani Enterprises Ltd

1
 Background | Adani Group
Adani Group, is a diversified organisation in India, headquartered in Ahmedabad, Gujarat with
combined market cap of $21bn comprising 6 publicly traded companies. It was founded by
Gautam Adani as a commodity trading business.1

Adani Group

APSEZ
AAPT SRCPL ATL AGEL
Ports & Logistics Rail T&D Renewables

AAPT APL AGL

Abbot Point IPP Gas DisCom

AEL
Incubator

AAHL ARTL AWL Data

Airports Roads Water Centre

*Blue colour represents public traded listed vertical

Background | Adani Enterprises Ltd

Started as a commodity trading company in 1988. Later it established new businesses in the
infrastructure and energy sector, Adani Enterprises Limited (AEL) was listed in 1994, is an
incubator to drive businesses. They have proactively participated in nation building activities.

Businesses such as Adani Ports and Special Economic Zone Limited, Adani Power, Adani
Transmission, Adani Green Energy and Adani Gas have been demerged from Adani Enterprises
and/or independently listed on the Indian stock exchanges.

Their key focus is on building infrastructure for Airports, Roads, Water, Data Centre and
Solar manufacturing.

1
Source: Adani Enterprises Annual Report 2019-2020| Adani
AEL Business Portfolio

2
Mining Integrated Resources Airports Roads Rail/Metro Water Datacentre Solar Agro
Defence
2
Services Management (MRM) Manufacturing
Resources Transport & Logistics
Enterprises LtdStrategic Investments
Key Promoter/CEO | AdaniUtility

Gautam Adani| Chairman

He is the Chairman/CEO and Founder of the Adani Group, has more
than 33 years of business experience. Under his leadership, Adani
Group has emerged as a global integrated infrastructure player with
interest across Resources, Logistics and Energy verticals.

Rajesh Adani| Managing Director

Mr Rajesh Adani has been associated with Adani Group since its
inception. He is also one of the promoters besides Gautam Adani. He is
in charge of the operations of the Group and has been responsible for
developing its business relationships. His proactive, personalized
approach to the business
and competitive spirit has helped towards the growth of the Group and its various businesses.

2
Source: Adani Enterprises Annual Report 2019-2020| Adani

3
 Political Exposure
Following are the excerpts/cases which shows allegedly the political association of the company
and/ or its promoters.

Political Association: Special Modi-Adani bond, chronologically charted, can be traced back to
2002

 Adani became an ardent supporter of Modi: The year Gujarat witnessed communal riots between
Hindus and Muslims. After certain businesspersons affiliated to Confederation of Indian Industry (CII)
and criticised Modi, a group of local businessmen led by Adani, established a rival organisation
Resurgent Group of Gujarat (RGG) and threatened to leave the CII. Adani pledged a sum of
₹15,000 crore for the first Vibrant Gujarat summit happening in Sep-Oct 2003. He thereafter
cemented his association with Modi and became his ardent supporter, lobbying for him in India and
abroad. On March 2013, after it became evident that Modi would be unceremoniously dropped as a
keynote speaker at a public function organised at the Wharton School of Business in the United
States because of pressure from academics and students opposing him, the Adani group, one of the
main sponsors of the event, withdrew its financial support.

 Gujarat Govt favours Adani Group since inception: Critics of Modi allege that the cosy
relationship between him and Adani has enabled the latter to bag many lucrative deals in Gujarat.

 Mundra port: When Modi was Gujarat CM, large tracts of land were given to his group at throwaway
prices (ranging between ₹1 to ₹16 per square metre) to set up India’s biggest private port at Mundra
on the west coast in violation of environmental norms. Media reports that have not been challenged
point out that the Adani group won 30-year-leases for getting 7,350 hectares around Mundra for as
little as one cent a square metre and then re-let the land for $11 per sq.m.

 Additional Land for SEZ: After the port became operational in 1998, the company had also
ventured into trading coal. Within the first years of Modi’s term as chief minister, the Gujarat
government handed over more than 5,500 hectares of additional land at Mundra for the Adani Group
to also establish a special economic zone. The land in the area was re-sold and/or leased by the
Adani group to various other companies, including public sector undertakings like the Indian Oil
Corporation (IOC), the Oil and Natural Gas Corporation (ONGC) at rates in excess of ₹600 per sq
metre. The group was also exempt from payment of all stamp duties for the thousands of acres of
land it acquired for the SEZ.3

 Acquired Dhamra Port when BJP led by Modi had won a majority seats in the Lok Sabha: on
16 May 2014, Back then Gautam Adani had proudly announced that a company in his group, Adani
Ports, had agreed to acquire a port at Dhamra, Odisha, for the equivalent of $0.92 billion or nearly

3
Source: The Incredible Rise and Rise of Gautam Adani: Part One| The Citizen| Apr 2015

4
 ₹6,000 crore. The construction of the port at Dhamra (which was earlier being built by a JV between
the Tata group and Larsen & Toubro) has been opposed by environmental activists, including
those affiliated to Greenpeace, for threatening mangroves and the nesting ground of hundreds of
thousands of endangered turtles.

 Penalty got waived off: The group started generating electricity in 2011, under a subsidiary named
Adani Power. Back then when Adani power was part of AEL. The CAG, in a report on the
performance of Gujarat’s state-owned enterprises for the 2011-12 financial year, revealed that Adani
Power, between 2009 and 2012, had not met its commitments to supply power to the Gujarat Urja
Vikas Nigam. The electricity corporation recovered only a third of the penalty it was due from this,
translating to a loss of Rs 160.26 crore.

 State Enterprises favouring Adani Group Numerous deals involving state-owned enterprises in
Gujarat which CAG flagged as having advantaged the Adani Group. In a report published in 2011,
the CAG showed that, between 2006 -2009, the Gujarat State Petroleum Corporation bought
natural gas on the open market and sold it to an Adani subsidiary at a cheaper rate, handing
the company a benefit of around Rs 70 crore. In 2014, the CAG revealed that the Gujarat
government had failed to monitor the construction of part of the Mundra port, and so failed to
recover Rs 110 crore due to it.

 Increased fortunes under Modi’s governance Modi’s time as Gujrat’s CM, between 2001-2014,
coincided with massive increases in the Adani Group’s fortune, and the conglomerate has continued
to prosper under Modi’s prime ministership. Adani and Modi are frequently pictured together at high-
profile events, including on the prime minister’s foreign visits, and Modi used Adani Group aircraft
while travelling to campaign for the 2014 general election. Modi’s administrations, at the state
and national levels, have repeatedly been accused of giving preferential treatment to Adani’s
businesses like concessional land deals and advantageous changes in regulation. The markets read
Modi’s arrival as the prime minister as a major boost to the Adani Group’s fortunes. The group’s
listed companies saw their value rise by some 85 percent soon after Modi’s inauguration,
compared to a 15-percent increase for the Sensex over the same period. Within a year of Modi’s
term at the centre, the companies’ market value had risen by over Rs 50,000 crore.
The Adani Group has faced multiple allegations of tax evasion, money laundering, bribery and
environmental crimes, yet it has largely evaded any action from regulatory bodies and
investigative agencies. The conglomerate is highly leveraged. As of 2017, the combined debts of
just its listed companies totalled Rs 1.1 lakh crore, or over $16 billion most of it owed to Indian state-
owned banks
 Evaded over-invoicing coal case under Modi’s leadership: The Directorate of Revenue
Intelligence has, since 2010, also been investigating over 40 companies, including five firms of the
Adani Group, for over-invoicing coal imported from Indonesia by an estimated Rs 29,000 crore,
resulting in inflated prices for power companies and consumers. In 2017, the DRI moved a court
in Singapore to order that an Adani company registered in the country hand over records of coal

5
 imports from Indonesia. The group has appealed to a higher court to block the order. In August 2017,
three years into the Modi government’s rule, the DRI dropped all charges against Adani Power
Maharashtra Limited and Adani Power Rajasthan Limited in a case involving the alleged
overpricing of imported power-transmission equipment by Rs 4,000 crore.

 Coalgate Scam: As per CAG reports In Aug 2012, the manner in which coal blocks were allotted
since early 1990s were illegal over a long period of time to public and private enterprises which
should have been through an auction process. This has incurred loss of close to 1.86 crores to govt.
In 2014, The Supreme Court had declared illegal 214 coal-block allocations, and noted a pattern of
state-owned enterprises granting lucrative contracts to private firms to mine and deliver coal from
their blocks. This compelled parties involved in exploiting the blocks to reapply for permissions and
renegotiate all mining agreements under stringent new rules Joint venture of the Adani Group and
a Rajasthan power corporation that are exploiting a captive coal block in Chhattisgarh is in
clear contempt of the Supreme Court’s landmark 2014 ruling regarding the “Coalgate” scam
and in breach of later laws, yet has faced no action under the Modi government. As per the
coal mines (nationalization) Act, 1973 The way JV was structured where 74% was held by Adani
group, 24% by state govt but it should be other way around.
Rajasthan govt which controls Rajasthan power corporation was led by the BJP, with Vasundhara
Raje as the chief minister. Raje was replaced in 2008 by the Congress’s Ashok Gehlot, who lobbied
for power corporation to receive clearances from the central government in order to begin mining
operations at Parsa East and Kanta Basan. Raje, after regaining power in 2013, as chief minister
again at that time made the decision to continue the joint venture unaltered, in 2015. The
Chhattisgarh government gave the final go-ahead for mining at Parsa East and Kanta Basan in 2013,
and production started at the block that same year. Chhattisgarh has been ruled by the BJP since
2003, with Raman Singh as the chief minister throughout. Adani misused the national mineral of
Rs.5,500 crore.4 5 6
 Illegal mining contract favours continues: Janta Congress Chhattisgarh (Jogi) leader Amit Jogi
alleged that Chhattisgarh Chief Minister Bhupesh Baghel has allowed Adani Group to loot state’s
minerals. He has struck deal to grant Consent by Chhattisgarh Environment Conservation Board to
Maharashtra Power Generation Company (MahaGenco) for Gare Paalma Serial Number 2 coal
mine. The mining contract for the same has been awarded to Adani Enterprises as on June 2019.7

4
Source: Extract from March Cover Story: The Massive Indebtedness of the Adani Group and Its Convenient Relations
with Government Enterprises| Caravan Magazine| Mar 2018

5
Source: Coalgate 2.0| Caravan Magazine| Mar 2018

6
Source: CBI not investigating ‘Adani’ in the Rs 5500 crore coal scam!| Bolta Hindustan| Feb 2019

7
Source: Why is Bhupesh Baghel silent on his alleged meeting with Adani officials?| One India| Jun 2019

6
 Regulatory, Compliance, Enforcement & Other Significant Red Flags

This covers any action/issue taken by RBI, SEBI, CBI, ED, or any other regulatory body.
 Custom Duty Evasion: Adani Enterprise was held liable for custom duty evasion in Feb 2010
by CBI. They arrested managing director Rajesh Adani for allegedly evading customs duty on
petroleum products, alleging undervaluation of imports of naphtha and furnace oil in 2005-
06 causing a loss of Rs 1.07 crore to the state exchequer.8
SEBI, ED have probed Adani Group for flouting customs rules in the past as on 2014.Along with
Income tax departments these bodies probed, after receiving references from the Directorate of
Revenue Intelligence who was investigating the matter9

 Bribing for iron ore mining interests: The Adani group had earlier been censured for paying
bribes to gain undue favours for its iron ore mining interests in Karnataka. In July 2011, as per a
report exposing illegal mining in Karnataka, the then Lok Ayukta (or people's ombudsman) of the
state Justice Santosh Hegde had indicted Adani Enterprises for having paid "bribes for getting
undue favour for illegal exports. Adani Enterprises has port facilities in Karnataka which, the
report alleged, were used for illegally exporting iron ore. The Lok Ayukta accused the company
of forging permits to transport iron ore. On 30 July 2011, following media reports about the Lok
Ayukta’s adverse remarks, the market capitalisation of Adani Enterprises fell by over a fifth or
₹22,177 crore in two and half hours of trading. That day, the prices of the shares of two other
group companies, Adani Power and Mundra Port & Special Economic Zone (MPSEZ), fell by
over 11 per cent and over 7 per cent respectively. 10

 Illegal Coal contract: CBI has filed an FIR on Jan 2020, against Adani Enterprises Limited, the
then chairman and two other top former officials of the National Cooperative Consumers’
Federation of India Limited (NCCF) for alleged corruption and cheating in the award of a
contract for supply of imported coal to the Andhra Pradesh Power Generation Corporation
(APGENCO). Accused in the FIR are the then NCCF chairman Virender Singh, managing
director G.P. Gupta, senior adviser S.C. Singhal, Adani Enterprises and other unknown public
servants.11

 Coal Supply Related corruption charges: CBI has booked 25 companies including those of
Adani group, Vedanta Limited and Jindal group among others, and four officials of Mahanadi
Coalfields Limited (MCL), a subsidiary of Coal India Limited on corruption charges relating to

8
Source: Adani Enterprises MD held for customs duty evasion| Financial Express| Feb 2010

9
Source: Sebi, Enforcement Directorate may probe Adani Group for flouting customs rules| Economic Times| May 2014

10
Source: The Incredible Rise and Rise of Gautam Adani: Part One| The Citizen| Apr 2015

11
Source: CBI files FIR against Adani Enterprises, NCCF officials| Hindu| Jan 2020

7
 supply of coal from MCL. The investigating agency has alleged that the corruption caused the
public sector unit a loss to the tune of Rs 97 crore. Following the levelling of corruption charges,
experts have raised questions on how the Adani group is being able to grab new power projects
despite several allegations of coal-related corruption. Adani group with two FIRs to its credit has
recently secured a power project of 1,320 MW from Madhya Pradesh government. In this
respect, Singh demanded that the Madhya Pradesh government should cancel its power
purchasing agreement in the Chhindwara project with Adani group.12

 DRI affidavit of impeding probe by Adani: The Directorate of Revenue Intelligence (DRI)

has accused the Adani Enterprises Ltd (AEL), in its June 13, 2019 affidavit to the
Bombay High Court, of trying to “impede” its probe against certain Adani Group firms
by challenging the issuance of Letter Rogatory in the court.13

 ED raid on portal facing Adani suit as on Feb 2021: The Enforcement Directorate has
launched searches at NewsClick, a news portal that has been slapped with a Rs 100-crore
defamation suit by the Adani group, and premises associated with its management. The portal is
known for its coverage of the peasants’ movement and investigative reports on big companies,
notably the Adani group which filed the defamation suit last year for two articles.14

Litigation

 Environmental Issues: Adani mining has been fined $20,000 after pleading guilty to providing
false or misleading information to Queensland's environmental regulator. The Brisbane
Magistrates Court belatedly declared clearing land on its mine site after environmentalists
complained to the Government. In court papers, the Department of Environment and Science
(DES) says that Adani filed its annual return in March 2018 with a graph declaring it cleared no
land on the Carmichael mine site, north-west of Clermont, in 2017-18.The DES alleged it
became aware of the offence six months later. It alleged Adani "knew or ought reasonably to
have known the document was false or misleading" because it had planned and carried out land
clearing before and during the reporting period.15

 Stock Rigging Case: In a setback to the Adani Group, a Mumbai sessions court has overturned
a 2014 order of a lower court which had discharged Adani Enterprises Ltd (AEL), its chairman
Gautam Adani and managing director Rajesh Adani for alleged cheating and manipulation of
share prices of AEL through entities controlled by Ketan Parekh, the stockbroker and main

12
Source: CBI books adani power other power generating companies coal supply scandal case| Newsclick| Mar 2020

13
Source: DRI Accuses Adani Group Firm of Impeding Over-Invoicing Probe in Bombay HC Affidavit: Report| The Wire|
Jun 2019

14
Source: Enforcement Directorate raid on portal facing Adani suit| Telegraph| Feb 2021

15
Source: Adani pleads guilty to giving 'false or misleading documents to an administering authority', fined $20k| ABC Net|
Feb 2020

8
 accused in India’s biggest stock market scandal back in 1999-2000. Almost three years after the
government filed a revision petition against the lower court order, the court of Additional
Sessions Judge D E Kothalikar has said an investigation by the fraud investigation office of the
government has “prima facie” established that the promoters of the Adani Group and Ketan
Parekh made “unlawful gain” of around Rs 388.11 crore and Rs 151.40 crore respectively via
alleged manipulation of the shares of AEL, the flagship firm of Adani Group16
In a relief to Adani Group , Bombay High Court stayed an order of the session court which had
last November restored a criminial case against AEL and irs chairman Gautam Adani and
Managing Director Rajesh Adani for alleged violations of market regulations as on Jan 202017

 Stay order by SC on the letters rogatory (LRs) sent by the Directorate of Revenue
Intelligence (DRI): The Supreme Court on Wednesday stayed a Bombay high court
order of October 2019, which had quashed the letters rogatory (LRs) sent by the
Directorate of Revenue Intelligence (DRI) to several countries in connection with a
case of alleged overvaluation of Indonesian coal imports involving some Adani Group
companies. DRI had initiated investigations in March 2016 against a few Adani group
firms for alleged over-invoicing of coal imports between 2011 and 2015. The bench,
while quashing the LRs, had noted that due process was not followed .18

16
Source: Court overturns clean chit to Adanis in share-rigging case| Indian Express| Jan 2020

17
Source: HC relief to Adanis in stock-rigging case| TOI| Nov 2020

18
Source: Supreme Court stays HC order, lets DRI pursue case against Adani firms| Livemint | Jan 2020

9
 Numerous enterprises owned by the central government have entered partnerships with the
Adani Group under Modi’s tenure. In 2017, Indian Oil and Gail invested in a 49% stake in a
planned natural-gas terminal valued at Rs 6,000 crore at the Adani Group-owned port of
Dhamra, in Odisha. This required both corporations to borrow on top of their already heavy
debt burdens. The controlling stake in the venture is with AEL. Indian Oil has also invested
Rs 750 crore in a 50-percent stake in a Rs 5,040-crore natural-gas terminal at Mundra that is
part of a joint-venture between the AEL and the Gujarat State Petroleum Corporation

Parsa east and canta basan in chatisgarh holding two blocks

This Jv should bedismanted by 2014.and existence since 2007

As per CAG report , chatisgarh state power generation limited corp entered into a mining
servicesa agreement with Adani minining, resulting in loss of 1500 crores

Raj govt earlier headed by Vasundhara raje and ashoke Gehlot cont with this agreemenr

Coal mines special provision act 2015 was passed in Narendra modi govt-all coal bloack if given
to private companies should go through auction process. Not followed in JV RJVUN and AEL.

Acc to calculations made in Carvan article Rajasthan co will be paying 6000 c

rore more over 30 yhears period. In addition to fuel benefits of 1000cr to them.

10
The coal blocks are more open cast and lucrative and coal is more close to the surface , near to
forest area is the most bio diverse part in central india. Jairam Ramesh Env minister in UPA govt
who opposed the view of Ashok Gehlot in allowing coal mines in this area

RJVUN is the onlu co 1/77 that had not complied wibn structuring of JV,

Way quality of coal blocks was apparently inflated gave undue benefitted to pvt companies like
AEL

Despite not f ollowing envitomental norms, allowed to go ahead with mining

Noor mohammed in wire

Piyush goyal introduced reversed coal bidding in the allocation of coal bloakcs and linkage-
where the bidder who promises to charge least from the consumer wins the block so that the
consumers get the benefit of low coal prices

In sept 2017, coal India Ltd allotted 27 million tonnes of caol to 10 pvt power plant for a period of
25 yrs

1/3 of coal was going to Adani power plants

11