GAUTAM ADANI is no stranger to ambush. In 1998 the Indian tycoon was kidnapped and reportedly released for a multimillion-dollar ransom. In 2008 he was at the Taj Mahal Palace Hotel in Mumbai during a terrorist attack, and spent a night hiding in the basement. Now he faces an assault of a different kind—not on his person but on the conglomerate that bears his name.
In the space of a week a staggering $92bn, or two-fifths, has been wiped from the market value of the Adani Group’s ten listed companies (see chart 1). The yields on some of those firms’ bonds at times spiked into distressed territory (see chart 2). Mr Adani’s personal fortune, the world’s third-biggest at the start of the year, has shrivelled by $50bn. A $2.5bn secondary share offering was abruptly pulled on February 1st. The rout raises questions about one of India’s mightiest business houses, the fate of its pharaonic ambitions in everything from clean energy to media—and about India’s tycoon-powered version of capitalism.
The haemorrhage was caused by what looks, next to an industrial empire spanning ports, power stations, media and much else besides, like a peashooter. On January 24th Hindenburg Research, a small New York investment firm, published a report accusing the Adani Group of pulling “the largest con in corporate history”. Hindenburg, which had taken short positions on some internationally traded Adani bonds and derivatives, detailed allegations of stock manipulation and other financial mischief. The purpose, according to the short-seller, was to inflate the market value of Mr Adani’s listed companies. Within days the Adani Group issued a 413-page rebuttal, calling Hindenburg’s report “all lies”—and a “calculated attack” on India itself. The Adani Group said it had always been in “compliance with all laws”.
This forceful response initially looked like enough to let Adani Enterprises, the group’s flagship listed entity, conclude its secondary share…
2023-02-01 14:30:05 What next for Gautam Adani’s embattled empire?
Original from www.economist.com Gautam Adani, Chairman and founder of the Adani Group, has seen his business empire come under increasing scrutiny in recent months. The group operates in numerous sectors including ports and power and is one of India’s largest conglomerates. In the face of an ongoing corruption investigation and environmental concerns, what is next for Gautam Adani’s embattled empire?
A major controversy concerning Adani’s business interests surrounds the alleged irregularities that have been uncovered in the development of the Carmichael coal mine owned by Adani Mining. The project has been the source of much debate, with environmental advocates decrying its potential impact on the nearby Great Barrier Reef. Questions have also been raised regarding the project’s economic viability, as the concerns appear to be leading to a slower than anticipated development process for the mine.
Despite this, the Adani group has pushed ahead with plans to expand its operations in other sectors. In recent weeks, the company has announced a series of expansion plans, including the construction of new ports and a port-related industrial park in India. In addition, the group has partnered with the state of Tamil Nadu to develop a major power project. The project includes plans for a large solar park, two solar farms, and a thermal power station.
The group has also been making investments in the renewable energy sector. Adani has already started its own solar panel manufacturing plant and has plans for additional renewable energy efforts. The conglomerate has also expressed interest in investing in EV fleets, and is even rumored to be considering a foray into the space industry.
In spite of the challenges he faces, Gautam Adani remains committed to expanding his business empire. His approach involves optimizing existing operations while pursuing strategic investments that provide long-term returns. As the investigation over the Carmichael mine progresses, Adani’s reputation and future may very well depend on the decisions he makes in the near-term.
What is certain is that Gautam Adani’s empire is not an easy one to manage. As he works to maintain his operations and diversify his business, it will be important for Adani to weigh the legal, environmental and economic risks associated with each move he makes. His ability to make wise decisions will ultimately determine the fate of his business empire.