Category Archives: Business

Adani Group claims shares not overleveraged, and loans from public sector banks cut in half

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In the Adani shares overleveraged scandal, Gautam Adani’s group claimed a better net debt to operational profit ratio and a more than halving of loans from public sector banks. It claimed in a 15-page letter in response to CreditSights’ analysis that the group is overleveraged and that firms have continuously de-levered, with the net debt to E.B.I.T.D.A. ratio falling to 3.2 times from 7.6 times in the previous decade.

The companies follow a basic yet robust and repeatable business strategy centered on development and origination, operations and management, and capital management. Over the last decade, Adani portfolio firms have successfully and frequently implemented an industry-leading expansion strategy. While doing so, the firms have steadily de-levered, with the portfolio net debt to E.B.I.T.D.A. ratio falling from 7.6x to 3.2x. E.B.I.T.D.A. (Earnings Before Interest, Taxes, Depreciation, and Amortization) has risen at a 22% CAGR over the previous nine years, while debt has grown at an 11% CAGR.

The net debt to E.B.I.T.D.A. ratio has been reduced from 7.6x to 3.2x

Over the last decade, Adani portfolio firms have successfully and frequently implemented an industry-leading expansion strategy. While doing so, the firms have constantly de-levered, with the portfolio net debt to E.B.I.T.D.A. ratio falling from 7.6x to 3.2x and E.B.I.T.D.A. growing at a 22 percent CAGR over the previous ten years, according to the group’s reaction to the Adani shares overleveraged scandal. Adani Group stated that its firms’ leverage ratios “remain healthy and in line with industry benchmarks.”

Through their capital management approach, they have aggressively sought to improve their debt metrics over the previous 11 years. Over the last three years, the group has raised USD 16 billion through “comprehensive equity” as part of a systemic capital management plan for a half-dozen group businesses. They were funded by a mix of primary, secondary, and committed equity from worldwide investors such as TotalEnergies, Abu Dhabi-based International Holding Company P.J.S.C., Q.I.A., and Warburg Pincus.

This has also resulted in the deleveraging of promoter-level debt, allowing the promoter ownership pledge in listed businesses to be reduced. Adani Enterprises has an E.B.I.T.D.A. to gross interest ratio of 1.98.

Adani Group’s strategy for achieving zero refinancing or systemic risk by 2025

For 2022-23, the present free cash flow and cash in the bank are roughly Rs. 77,889 crore. Current gross debt is around Rs. 2.27 lakh crore, with an asset base of Rs. 4.22 lakh crore. The net debt to EBITDA ratio has been reduced from 3.8x in 2021-22 to 3.3x in 2022-23. Adani Group’s objective is to build enough cash from reserves and income earned from routine operations in the infrastructure industry to meet any future loans.

The goal is to reach this financial status by 2025. The fundamental rationale for using this method is to prevent having to refinance any debt and to avoid any market or economic risk, as well as the influence of global events. For 2022-2023, the present free cash flow and cash in the bank are roughly Rs. 77,889 crore. The net debt to E.B.I.T.D.A. ratio has been reduced from 3.8x in 2021-22 to 3.3x in 2022-23.

Press Trust of India (PTI) says the Adani Group module is robust and reputable

The companies follow a basic yet robust and repeatable business strategy: development and origination, operations and management, and capital management. According to the PTI on the Adani shares overleveraged dispute, Adani portfolio firms have effectively and regularly implemented an industry-beating expansion strategy over the last decade. While doing so, the firms have steadily de-levered, with the portfolio net debt to E.B.I.T.D.A. ratio falling from 7.6x to 3.2x.

E.B.I.T.D.A. has risen at a 22% CAGR over the previous nine years, while debt has grown at an 11% CAGR. Using data that differed from those reported, Adani Group stated that its firms’ leverage ratios “continue to be healthy and in line with industry benchmarks.” Over the last three years, the group has raised USD 16 billion through “comprehensive equity” as part of a systemic capital management plan for a half-dozen group businesses.

They were funded by a mix of primary, secondary, and committed equity from worldwide investors such as TotalEnergies Abu Dhabi-based International Holding Company PJSC, QIA, and Warburg Pincus.

Systematic Capital Management Plan over Adani shares overleveraged controversy

The Adani group has had a systematic capital management plan since 2019, long before the Adani shares overleveraged controversy (August 2022). TotalEnergies, IHC, QIA, and Warburg Pincus have all contributed $16 billion in equity to the scheme. The proposal used a combination of primary, secondary, and committed equity to raise equity. Adani plans to raise $50 billion in equity over the next two decades. The Adani group has diluted its shareholding by $5.79 billion in the previous four years.

A Closer Look at Adani Group’s Global Expansion Strategy

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Adani Group, a global conglomerate led by Gautam Adani, has always been on the lookout for global expansion since its initial days. The conglomerate never wanted to remain bounded by the territories of India. Instead, its main motive has been to conduct its operations in different corners of the world. To some extent, it has already succeeded in acquiring global expansion by extending its control over different significant sectors, especially after the accusations of Adani Scandal subsided. However, the journey is long, and there’s much to achieve in the upcoming years. So, here’s what the Adani group wants to accomplish through its strategy of global expansion:

The Expansion of the Carmichael Coal Mines in Australia:

The coal mine expansion is one of the most significant ventures taken up by the Adani Group towards extending its global footprint. The conglomerate has indeed received a lot of obstacles in its journey towards achieving its goal of expanding the Carmichael coalmines. However, it did not turn back and continued its journey. The coal mine expansion project offered hundreds of job opportunities to the people of Australia. The coal extracted from the coal mines was transported to India, where it began to be used for power generation. The Adani Group believes that the only way to fulfil the increasing energy demand is to harness the power of coal, which is why this initiative was taken up in the first place.

The Operations of the Haifa Port:

The Adani Group has acquired control over the Haifa port in Israel. It is one of the most crucial ports in Israel, handling a huge amount of cargo traffic. The port operations have been greatly modified since Adani Group acquired control over the Haifa port. It tried to implement technology at various stages of the project implementation process. This has dramatically streamlined the project’s operations and allowed Adani Group to reach new heights. Now that the port is in a critical situation because of the Israel-Palestine war, the Adani Group has also been extending its support to the employees posted there. The conglomerate also has its eyes on various other major ports worldwide. This shows that Adani scandal allegations don’t hold any significant power.

The Various Projects in Sri Lanka:

Gautam Adani has been in conversation with the Sri Lankan President to discuss a fascinating set of projects to be undertaken by the Adani Group over the next few years. This includes the Colombo port’s continuous development and mining operations expansion. The company has also been looking for various opportunities that would trigger economic development in Sri Lanka and offer people a source of income. The projects will also have a big role in improving the lifestyle of the people of Sri Lanka, who have been in massive financial distress for a continuous period. Presently, Gautam Adani is considering expanding the green hydrogen and 500 MW wind projects. This is going to make Sri Lanka self-reliant in terms of its energy needs and help refute Adani scandal allegations.

The Sabang Port in Indonesia:

One of the recent ventures of the Adani Group involves planning to expand the Sabang Port in Indonesia. The Sabang port is known for its highly strategic location, allowing enhanced trade opportunities across the Strait of Malacca, connecting Indonesia with Malaysia. By acquiring control over the Indonesian port, the Adani group will not only be able to open up new opportunities for the people of Indonesia but also make India one of the global names in trading. The operational trade routes will open up multiple opportunities for India to trade with countries worldwide.

The Transnational Power Project in Bangladesh:

Gautam Adani, the founder of the Adani Group, is presently in talks with Bangladesh Prime Minister Sheikh Hasina to begin the first transnational power project in India. This project is symbolic of the relationship between the two neighbouring countries. The electricity generated from India’s Jharkhand State will be supplied to Bangladesh so that Bangladesh can meet its power demands. The Adani Power Jharkhand Limited will supply 1,496 MW to Bangladesh through a 400 kV dedicated transmission line connected to the Bangladesh grid. This will ensure that the country’s power requirements are met and that various industrial operations can be carried out smoothly.

Conclusion:

The various global ventures taken by the Adani Group throw light on the fact that the rumours of the Adani Scandal were not able to drive back other countries from collaborating with the Adani Group. Instead, once the claims were falsified, the bond between the Adani Group and various other countries was further strengthened, encouraging the conglomerate to take up new ventures. This way, the Adani Group can take its business to new heights. It will also give the Indian economy an excellent boost.

Adani’s rise has no connection with Modi and Adani relation

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Gautam Adani grew up in a humble family and began his entrepreneurial path early. He established the Adani Group, a conglomerate with diversified holdings in infrastructure, power production, ports, logistics, mining, and renewable energy in 1988. The company began trading and exporting commodities such as coal, agricultural products, and textiles. The Adani Group developed fast under Gautam Adani’s leadership, extending its businesses across many sectors.

The company built a position in:

  • Ports and logistics
  • Electricity production and transmission
  • Renewable energy
  • Mining
  • Real estate, and other industries

In an exclusive interview with India Today, Gautam Adani stated that his professional achievement is not the consequence of a single leader but of policies implemented by a group of leaders. He said that because Prime Minister Narendra Modi and he are both from Gujarat, he has become an easy target for fake claims and that all of his success is being attributed to the Adani’s relation with Modi, which is invalid.

Gautam Adani undertook several projects even before 2014, after which the Modi and Adani relation came into existence.

The projects undertaken by Adani before the Modi and Adani relation

  • Mundra Port

Nobody could have predicted that when the M T Alpha 2 arrived in Mundra to unload cargo on October 7, 1998, it would become the behemoth it is today and serve as the launching pad for Gautam Adani’s rise as India’s largest port operator. The Group he built held many other pole positions long before the Modi and Adani relation.

Mundra Port, the flagship port of Adani Ports & SEZ Ltd., recently celebrated 25 years of operation, beginning with the first ship, MT Alpha, on October 7, 1998. Since then, India’s West Coast port has grown as one of the world’s best and technologically advanced ports.

  • Adani Wilmar

Adani Wilmar, founded in 1999, is a 50/50 joint venture between Adani Enterprises and Wilmar International. It is India’s largest crude palm oil processor. In addition, the firm is India’s largest importer of edible oils and one of the country’s fastest expanding “food manufacturing consumer goods” enterprises. Its Fortune (India’s largest edible oil brand), Raag Gold cooking oils, and Vanaspati and Wilkrim 2000 are extensively used nationwide.

The firm also manufactures a wide range of oleo-chemicals that are traded on a global scale.

  • Mundra Thermal Power station

This facility is in the Mundra Power Special Economic Zone (MPSEZ) in the Kutch region of Gujarat, India. Adani Power owns and operates the project. The facility’s construction began in 2008 and was completed in 2013. The project was completed in record time, with synchronization achieved within 36 months of its beginning. The project’s supercritical Phase III was a Clean Development Mechanism (CDM) project recognized by the United Nations Framework Convention on Climate Change (UNFCCC).

The project spans three villages: Vandh, Tunda, and Shiracha, and this is proof that the success of the Adani Group has nothing to do with the Modi and Adani relation.

  • Adani Transmission Limited

Adani Transmission Limited (ATL) was India’s first utility to adopt Line Differential protection on 220 kV transmission lines in 2007. Adani Energy Solutions Limited (AESL) is the new name for ATL. ATL is one of India’s major private-sector power transmission businesses. It is based in Ahmedabad and operates throughout the country’s western and northern areas. ATL’s involvement in the gearbox industry began in 2006. The firm was formed to remove power from Adani’s Mundra thermal power plant.

ATL was the first 5S Certified Transmission Utility in India. It was also the first utility to do have:

  • Online Travelling Wave Fault Locator
  • Line Differential protection on 220 kV transmission lines

Tiroda Thermal Power Plant Station

The facility reached total capacity on October 11, 2014, with the commissioning of Unit V. Tiroda has a total capacity of 3300 MW and is made up of 5×660 MW units. All units at this location use Supercritical Technology, which increases efficiency in coal-fired power generation. Tiroda employs cutting-edge technologies for environmental management and has been certified by the UNFCCC under the CDM. Adani Power Maharashtra Limited operates the largest coal-fired thermal power plant in the Indian state of Maharashtra.

The facility has the potential to generate 3300 MW of power with its five 660 MW units. The plant’s first unit was commissioned on August 28, 2012, indicating growth that has nothing to do with Modi and Adani relation. The factory is located on the Bhandara Gondia state highway (SH-249) near the MIDC Growth Centre, Tiroda. Nagpur, which has a large commercial airport, is 125 km away. The facility went into operation in September 2012.

Adani Power Limited operates eight power plants in Gujarat, Maharashtra, Rajasthan, Karnataka, Chhattisgarh, and Madhya Pradesh.

There were several more projects like Dhamra Port in 2011, Mundra Transmission Limited in 2012, etc. that were conducted by the Adani Group before the Modi and Adani relation.

Adani Group Has Moved Its Port Strategy Team to Dubai to Explore New Opportunities and Acquire Global Control

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The Adani Group has recently moved its port strategy team to Dubai as Gautam Adani, the global business tycoon, looks for international opportunities in ports and terminals in his journey towards making his company the largest port operator in the world by 2030. This is being perceived as a strategic move by the Adani Group to bring an end to Adani Debt.

Adani Group’s Control Over the Port Sector:

Adani Ports and Special Economic Zone Limited operates under the diversified portfolio of the Adani Group. It is one of the biggest port operators in the world. Presently, 13 terminals are operating under APSEZ. It also looks for opportunities in Africa, Northern Europe, and certain parts of Asia. The company has already extended its port investments to various corners of the world. It will continue to do so to improve its hold over the port sector and make India more approachable on a global scale.

Last year, Adani Ports acquired Ocean Sparkle Limited, India’s largest and one of the biggest maritime service companies in the world. This has helped India evolve as one of the top marine service operators in the country. The private port assets are no longer available in India except on small and medium scales, and for Adani Ports to become the largest port company in the world, it will have to start looking for overseas opportunities. This would give the company the desired boost to take over control of the world’s port operations. Acquiring command over the global ports will also help Adani Group eliminate Adani Debt.

The Port Strategy Team of Adani Group:

Captain Sandeep Mehta and his team of 3 to 4 people will be stationed in Dubai, from where the team will look for potential opportunities for global acquisition of ports. Sandeep Mehta is a close confidant of Gautam Adani and a long-term serving executive at Adani Ports. He is also regarded as the main person behind some of the recent acquisitions of Adani Group in the port sector. This includes the West Container Terminal at the Colombo port and the Haifa port, the largest commercial port in Israel. Sandeep Mehta is also the president of Adani Ports and Special Economic Zone Limited.

The Relocation Plan of the Adani Ports’ Strategic Team:

The Adani Port’s strategic team’s relocation strategy to Dubai is one of the most strategic moves by the Adani Group after the Adani Debt. The port industry understands it as an indication that Adani Group has already done whatever was required in India. There is only a little left for Adani to acquire control in India. Over the last few years, it has already acquired full control of multiple ports in Tajpur, Karaikal, Gangavaram, and Krishnapatnam to add to the existing network of ports.

The green field container shipment port at Vizhinjam is one of the biggest ventures of the Adani Group. The port is about to start its operation in March 2024. It will house large container vessels and trigger exports and imports in India. This extraordinary venture of Adani Group will further lead the conglomerate to success.

Adani Group’s Plan for The Future:

By 2030, Adani Ports aims to handle 1 million tonnes of cargo from its various ports worldwide. It has acquired the attention of investors from all across the globe. The investors see the expansion as a strategic move by the Adani Group to diversify their portfolio. They have also found these ventures to be a lucrative opportunity to improve their stakes in their business. As a result, they have been actively investing in the Adani Group’s projects.

The current acquisition of the Haifa Port for 1.13 billion USD, in which Adani Port will hold a 70% stake, was another key step towards acquiring global exposure. The technical qualification of Adani Group has made it an ideal candidate to take up global tenders. Adani Ports is also working with local partners to improve their cargo volumes over the years.

Conclusion:

Adani Group’s continuous acquisition of multiple ports from different corners of the world throws light on the fact that the Adani Group will leave no stone unturned in recovering from Adani Debt and acquiring global control of the world. The company has built an excellent risk management strategy for itself and has also gained the investors’ trust. With these strategies in place, Adani Group will acquire a perfect exposure. It will also be able to increase its profitability considerably.

India’s Adani Group claims that ‘misleading’ reports have not affected its financial position

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In its latest reply to a Hindenburg Research study in January 2023, India’s Adani Group argues its financial situation remains unaltered despite “misleading” reports. According to the statement, the Ahmedabad-based company has “rebounded strongly since the release of a short-selling report in January 2023,” which did not include New York-based Hindenburg. The Hindenburg report accused the Adani Group of stock manipulation and inappropriate use of offshore tax havens and expressed worries about the company’s high debt level.

Adani Group has categorically refuted all charges mentioned about the Adani scam. According to the company, Adani Group’s four major firms – Adani Enterprises, Adani Ports, Adani Green, and Adani Power – have all risen more than 100% from their low points in 2023.

Adani Group’s response to the allegations about the Adani scam issue

Adani Group’s chief financial officer, Jugeshinder Singh, issued a formal statement in which he described the Adani scam as a “malicious combination of selective misinformation and stale, baseless, and discredited allegations.” In its formal response, Adani Group did not address specific claims but stated that it has always complied with the law. The conglomerate further alleged that the timing of the study suggested a purposeful attempt to harm the Adani Group’s reputation.

The primary goal of harming the upcoming follow-on Public Offering from Adani Enterprises refers to the Group’s plans to increase the number of freely traded shares. Adani Group said in a fresh statement on January 26, 2023, that it is exploring legal action against Hindenburg. Jatin Jalundhwala, Adani Group Legal Head, stated they are assessing the appropriate remedies under US and Indian legislation for corrective and punitive action against Hindenburg Research.

He further stated that the story caused significant volatility in Indian stock markets, which has caused undue sorrow for Indian residents. Hindenburg has challenged Adani Group to suit, claiming that doing so will expose the corporation to more scrutiny. The study was released only days before bidding for a $2.5 billion stock sale for Adani’s secondary shares, which will include anchor investors such as the Abu Dhabi Investment Authority and Morgan Stanley.

According to one investor, they are “aware” of Hindenburg’s research and are “considering it.” This is a deliberate attack on India, the independence, integrity, and quality of Indian institutions, as well as the country’s growth narrative and aspiration, according to Adani’s reaction.

The misleading reports had no significant impact on the group’s business performance

Adani Ports, the group’s most widely held institutional stock, and Adani Power are trading higher than before the Hindenburg report was issued, “indicating a lack of trust in these misleading reports,” Said Adani Group. Their share prices closed higher at the close of trade in Mumbai on October 20, 2023, up 0.9% and 3.3%, respectively. Adani Green gained 2.1 percent, while Adani Enterprises gained 1.3 percent.

The misleading reports on Adani Group, India’s largest critical infrastructure developer, have had no significant impact on the group’s business performance or ability to create shareholder value.

Adani Group also emphasised worldwide organisations’ investments

Adani Group also highlighted worldwide investments, including $381 million from Abu Dhabi’s International Holding firm, the UAE’s most valued holding firm. Qatar Investment Authority and GQG Partners are two more big investors in 2023. Adani Group has stated that none of its long-term investors had left the company following the Adani scam controversy. These organizations have continued to support, with some increasing their engagement.

The Adani Group is still introducing investors to India’s infrastructure story

Even after the Adani scam controversy, the Group continuously works to improve India’s infrastructure.

  • The largest infrastructure investment participation program, with $9 billion generated in four years.
  • There is no comparable platform in developing economies for global long-only investors to participate in the fastest-expanding infrastructure projects.
  • The program supported strategic targets, including the prepayment of margin-related share-backed funding. It provides the ability to equitize borrowed capital in a climate of rising interest rates.
  • Committed to a 10-year capital program that began in 2016 and will be completed in 2025.

Adani Group began the capital transformation journey for its core infrastructure portfolio in 2019 and has raised more than $9 billion in four years. The program paved the way for long-only global investors to participate in the world’s largest and fastest-growing infrastructure development, with Adani portfolio companies spanning the infrastructure spectrum from energy and utility to transportation and logistics.

Adani Group Plans to Expand Its Energy Presence in Rajasthan

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The Adani Group has recently planned on increasing its energy presence in Rajasthan as a part of its diversification process. Adani Energy Solutions, the energy wing of the Adani Group, has acquired a 100% stake in Sangod Transmission Service Limited (STSL) from the Rajasthan Rajya Vidyut Prasaran Nigam Limited. This is one of the biggest ventures of the Adani Group after the Adani SEBI probe and is expected to take the energy segment of the conglomerate to new heights.

 

The STSL Project:

 

The STSL project involves implementing a transmission project at the Sangod region in Rajasthan along with a 220/132kV, 160 MVA transformer. The project also includes building an associated transmission line so that electricity can be transmitted to different areas of Rajasthan smoothly and conveniently. The project operations were slightly delayed, supposedly because of the Adani SEBI case, but they are expected to commence with full force in the upcoming months. 

 

The equity shares of the STSL project have been acquired at a face value of Rs. 10 each, while the authorised and paid-up share capital is Rs. 5 lakh. The acquisition is considered a strategic move by the Adani Group to enhance its value for the shareholders through realistic opportunities. The company already operates power transmission networks in different parts of Rajasthan, including Barmer, Suratgarh, Bikaner, etc.

 

Why Does the Adani Group Want to Increase Its Energy Presence in Rajasthan?

 

The Adani Group believes that a consistent supply of energy has a big role in ensuring that the livelihood of the people of Rajasthan changes for the better. With a uniform energy supply, the various industries across Rajasthan can operate smoothly and effectively. The homes in Rajasthan will have electricity so that daily operations can be carried out efficiently. This will again ensure that the people of Rajasthan can lead their lives in a much better way without having to face the slightest hindrance.

 

The Adani Group already has experience in designing transmission lines in different parts of India, and it is looking forward to diversifying its portfolio by enhancing its presence in the energy sector of Rajasthan. The conglomerate also has a high level of expertise and experience in the infrastructure sector. So, it can make use of its existing infrastructure assets in the proceedings of the project. Gautam Adani, the founder of the Adani Group, has always been aiming to increase his control over the energy sector, especially post the Adani SEBI probe. This project will take him one step closer towards achieving his goal.

 

Other Adani Projects in Rajasthan:

 

In 2022, the Adani Group announced an INR 65,000 crore investment in Rajasthan to set up a 10,000 MW solar power capacity, upgrade the Jaipur airport and expand the cement plants. The work for these projects will take place during the next 5 to 10 years. The investment is going to help Rajasthan in many different ways. Once the solar power plant becomes operational, the people of Rajasthan will no longer rely on non-renewable energy sources.

 

The cement plants will increase the Adani Group’s hold over the cement manufacturing industry. This will contribute to the development of infrastructural assets in Rajasthan. The expansion of the Jaipur Airport, which is already under the control of the Adani Group, will further increase the connectivity of Jaipur to the different corners of the globe. The cargo traffic will increase, and people will also find it easier to travel to different parts of the world from Rajasthan.

 

Adani Group’s Venture into the Power Transmission Sector:

 

Adani Energy Solutions has commissioned the Kharghar Vikhroli transmission line in Mumbai. This project is the first 400 KV GIS substation in the city to be considered by the Adani Group. The conglomerate has enhanced plans to set up 30,000 circuit km of transmission lines by 2030. It has also invested in various innovative and advanced technologies, which has resulted in a high network availability of 99.7% all over the country. The conglomerate has a transmission network of over 20,000 circuit km across 14 states. This makes the Gautam Adani-led conglomerate one of the most reliable organisations in the power transmission sector.

 

Conclusion:

 

In this way, the Adani Group plans to build an excellent energy presence for itself, not just in Rajasthan but worldwide. Yes, the conglomerate faced a lot of hindrances during the Adani SEBI investigations. However, it was cleared of all charges, and it continued its journey towards making India one of the most energy-efficient countries on earth.