History tells us that in the intent to pre-warn the attack on Pearl Harbor, the timing was off.
On Dec. 7, 1941, two envoys, steeped in Japanese culture, chose to visit the US Secretary of State, solemnly bow and hand over an envelope, which in effect contained a declaration of war against the United States. However, a squadron of dive bombers and fighter planes had departed sometime earlier, and the aerial attack caught American ships and sailors unaware.
Trade wars of the modern world – fought against the backdrop of geopolitics – are unforgiving, precise in targeting, and come without the old-world courtesy of pre-warning by emissaries. Case in point: The fracas faced by the now famous Adani Group, which its detractors are keen to make infamous. Two recent instances:
1. Launch of Follow-on-Public Offer (FPO) by Adani Enterprises in January 2023:
A few days before the FPO, a US-based research firm and short-seller named Hindenburg Research released a report that alleged financial fraud and stock manipulation by the conglomerate. The title was as dramatic as the timing, and if there was a wry and unintended compliment it was the acknowledgement of Gautam Adani’s ranking in the pecking order of the wealthy: ‘Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History.’
Key outcome: Adani did the unthinkable. Stating that investors’ interests are paramount, he announced a full refund of the Rs. 20,000 crore FPO subscription to insulate them from potential losses.
The share price of Adani Group stocks plummeted. Most of the Indian media, which picked up the Hindenburg Report and hyped it to the max, forgot to note that the research firm, which had taken a short position on stocks of the same Group it had targeted, stood to gain and in fact, did.
As disclosed in a statement by Hindenburg Research, and reported by Bloomberg, the firm made over USD 4 million from its short-selling position on Adani stocks. Something like a neighbour circulating a rumour about your apartment being in bad shape or haunted, leading to a drop in its price, and steps in as a buyer when you make a distress sale.
Considering the gain of USD 4 million is not life-changing in the high-stakes international arena, the question those in the know ask is: Was financial loss to the promoters the primary aim, and profit for the short seller a secondary goal? With the majority shareholding in Adani group companies held by the founder and family members, their loss due to tumble in share prices soon after FPO cancellation was significant.
Next to the promoters, significant shareholders in Adani Group companies are mutual funds, insurance companies and financial institutions, and this cohort too suffered losses.
Retail investors hold less than 10 percent of group stocks, except for Adani Wilmar (44% holding by Adani group now divested). Company-specific retail stake holding is 2.78% in Adani Enterprises, 9.2% in ACC, 5.46% in Adani Total, 4.8%in Adani Power and 4.6% in Ambuja Cement.
Some sections of the media did bring out an informative news item in the aftermath. As we tend to view many things ‘phoren’ as superior and believable, we overlooked this red flag too: Market regulator SEBI sent a show-cause notice to Hindenburg, stating that Kingdon Capital Management, a New-York based hedge fund, had access to the Adani Report two months before it was published. SEBI’s notice said that the fund had given Hindenburg 30% of the profits it made from Adani trades.
While Adani refunded the FPO subscription, it was an institutional investor named GQG Partners who brought relief in March 2023 by infusing Rs 15,446 crore as a minority stake into four Adani Group companies – Adani Ports and Special Economic Zone, Adani Green Energy Limited (AGEL), Adani Enterprises Ltd and Adani Transmission.
1. USD 600 Million Bond Issue by AGEL in November 2024
Ten months after the Hindenburg debacle, it was déjà vu for the Adani Group, with a fresh disruption – well-timed again – coming as it did one day before the launch of the bond issue.
The US Department of Justice (DoJ) announced an indictment against AGEL on charges of bribery, corruption and other malpractices. AGEL, which was all set for the market, withdrew the issue. Its stock took a nosedive, and the Kenyan Government cancelled major projects it had planned with the group. The founder remained unfazed by the allegations, and remarked “every attack makes him stronger.”
The rise from diamond sorter to business tycoon and infrastructure icon
The first-generation entrepreneur began his journey in Gujarat, moving to Mumbai in 1978 as a teenager – to train as a diamond sorter. In the late 80s, he established Adani Enterprises, after relocating to Ahmedabad. His first foray was in global trading, through import of polyvinyl chloride and various commodities.
Power generation was an organic extension, starting with thermal and foraying into renewable energy. Year on year, diversifications and acquisitions followed, and the spectrum of businesses the group owns and operates indicates a strategic avoidance of over-reliance on any specific sector, which means cyclical change in one is likely to be offset by stability in another.
Here is a list: Road, Metro and Rail, Airports, Mining, Metals, Coal Trading, Wind Power, Solar Energy, Agro (apple cultivation and fruit retail), Edible Oil & Foods, Wastewater Treatment, Defence, Aerospace, and lastly a foray into setting up of Data Centers through Adani ConneX.
In the mining and metals vertical, a greenfield copper smelter with an investment of USD 1.2 billion and an annual capacity of 500,000 tonnes will soon be commissioned at Mundra, Gujarat. This will help India regain its status as a net exporter of copper.
Five ventures that contribute to sustainability are worth a closer look:
• Setting up an integrated green hydrogen generation facility at Mundra SEZ with an investment of USD 9 Billion – towards building non-fossil energy capacity,
• Work in progress on the world’s largest power plant by AGEL, which will produce renewable energy from solar and wind power sources.
• Emerging as the largest player in the private sector in thermal power, with the world’s first coal-based super-critical thermal power project committed to reducing greenhouse gas emissions under the Kyoto Protocol.
• Adani Ports and Special Economic Zone has been ranked among Top 10 global transportation and transportation infrastructure companies in S&P Global’s Corporate Sustainability Assessment, and secured the No. 1 spot in the environmental dimension, as per a BSE filing in January 2025.
• Adani ConneX data centre in Chennai, and others in Hyderabad, Mumbai, Pune, and Vizag are designed to be powered by renewable energy.
Despite the plan to stay diversified, the segment that defines the group is infrastructure.
Institutional investors like to take contra bets on infrastructure-focused companies even when a stock slides. The reason is infra, unlike trading or services is more stable, assets have long-term revenues that are contracted and can be resilient in a high inflationary economic environment.
Example: Adani Airport Holdings Ltd has secured the rights to lease, operate, and develop airports in Mumbai, Navi Mumbai, Lucknow, Mangaluru, Thiruvananthapuram, Guwahati, Ahmedabad and Jaipur.
In the post-liberalization era of the mid-1990s, Adani established the group’s first port project at Mundra, Gujarat. This would eventually become India’s largest commercial port and serve as proof of concept of ability to envision and execute large-scale projects. Case in point the public-private partnership between Adani Vizhinjam Port Pvt. Ltd. and the Kerala Government to develop in phases India’s first deepwater Container Transhipment Port at Vizhinjam, near Thiruvananthapuram.
In a transhipment port, the mother vessel (a large ship) can unload cargo into a feeder vessel. Built with an investment of Rs 8,867 crore and with an additional outlay of Rs. 11,000 crore in the next four years, the port is cited as an example of a successful large-scale PPP project.
Shri Sarbananda Sonowal, Union Minister of Ports, Shipping & Waterways, remarked at the time of docking of the first mother ship at the semi-automated port in July this year:
“This is the testament of the vision of ‘Make in India’ where a PPP collaboration among Govt. of Kerala, Govt. of India as well as Adani Ports and SEZ has created a wonderful asset for growth of India’s maritime sector. Under the visionary leadership of Prime Minister Shri Narendra Modi ji, India is equipping and enabling entrepreneurial ventures and collaborating as and when required to build capacity for the cause of nation building.”
Soft target or hard nut to crack?
Even Adani loyalists would agree the group’s alignment with nation-building makes it easy to bring up allegations. Here is why:
Infra in India is capital intensive, and next to our State and Central governments, the Adani Group makes the largest investment in roads, ports, metro, and rail lines. Those who don’t want to look deep into a balance sheet may ask a flippant question: Where is all the money coming from, and why is the award of several government contracts skewed to one company?
For those interested in the answer, the group has the money to start and finish a project (cash balance as of November 2024 Rs. 53,024 crore). When required, it can raise debt from institutional investors, as demonstrated in the past. Group companies have raised as much as USD 1 billion and USD 500 million in July and October 2024 through Qualified Institutional Placements.
Effort first, result next
A television commercial for AGEL currently on air portrays a village boy wondering when his home will have electricity. He is perplexed by his father’s promise that the sequence is punkah first, and bijli next. The camera pans to a windmill being commissioned and street lights switch on. A metaphor that conveys a transitional step is a sine qua non for the path to progress and nothing happens overnight in the world of infrastructure creation.
When interlinked with social objectives, infrastructure transcends opinion chasms – when the planned project comes to life as a public utility or is poised as a game changer. Such as the plan for 30-Gigawatt solar power and wind energy from a barren 538-sq.km. location at Khavda, Gujarat, docking of the 100th vessel at the transhipment port, and test flight from the almost complete Navi Mumbai Airport.
If home-grown conglomerates such as Adani do not pitch for large-scale infrastructure projects, we will end up having a neighbour building our ports and roads, like is happening in an island nation next door.
A related point: Infrastructure creation can be viewed as Real Estate in its most refined form. Just like land and buildings which appreciate over time, the value of finished structures in the core sector will continue to rise, which is reflected in balance sheet line items and company indices in the form of net worth, fixed assets and operating revenue.
Consequently, the biggest shareholder stands to gain, hence there is no point in fretting that Gautam Adani is now India’s second richest individual with a net worth of USD 116 billion as per Forbes India ranking, October 2024.
Entrepreneurs and business leaders distinguish themselves with foresight. The 18-year-old who was sorting diamonds in Bombay in the late 70s, and importing PVC in the early 90s, had the vision to understand India’s growth trajectory soon after liberalization. Every few years, he consolidated an existing business vertical and diversified into a new one.
The Talisman
The heads of many other Indian-origin conglomerates have displayed similar acumen, but the difference with Adani is his orientation, first with the growth plans of Gujarat when Shri Narendra Modi was the Chief Minister, and in the last 10 years, with India’s plan to scale its ranking as a global superpower under the leadership of Shri Modi as Prime Minister.
It is the association or alignment that has drawn criticism. Look closely, and there’s not enough strength in the argument. Over 25 Indian States that have welcomed investment by Adani in the last two decades have been ruled by different political parties with diverse ideologies – not just by the one he is being linked with.
As Adani said in a recent media interview: “We are ready to work with any government, as far as they are not doing any politics.”
Candid statements notwithstanding, we live in a world where success attracts negative views, and critics rely on information circulated by anti-India forces. The gainers are market players behind the scenes.
Doing a Houdini
The latest news update is Hindenburg, the short seller that profited from allegations, seems to be running for cover. The founder announced on January 15, 2025, the abrupt closure of his company in the United States. Does that vindicate Adani’s stand that the damaging research report had no basis? Will we in India, media included, now begin to view such reports, not as revelations, but as a conspiracy to destabilize Indian markets?
Look closely, it is fast-rising, first-generation business leaders whose companies secure mega contracts who bear the brunt of accusations. When projects are won based on a two-bid system with due weightage given to Technical and Financial aspects, why assume all barriers have been greased, and people have been pleased? Just as elections lost are declared by the loser as rigged, has it become an auto reaction to claim a specific contract has been secured by manipulation?
Deals can be won on a combination of eligibility, competence, track record, and as happens often, through the ‘old boy’ network, and past relationships. This is a reality the world over, hence all steps towards success need not be tainted. In conformance with the principles of jurisprudence, a person or group should be assumed innocent until proven guilty.
Chandrababu Naidu, Chief Minister of Andhra Pradesh, a politician known for fair views and a ‘CEO approach’ to State governance, has remarked recently that no action will be taken against the Adani Group, such as cancellation of contracts awarded in AP, until concrete proof is obtained, and charges are confirmed.
The juggernaut is still rolling with Adani announcing in January 2025 an investment of Rs. 75,000 crores in Chattisgarh in sectors ranging from power and cement, and CSR initiatives such as tourism, education, health and skill development.
Group stocks that gasped for breath in November 2024 are on a rebound, even more since January 15, 2025, when Hindenburg did a Houdini. As for GQG Partners, which invested Rs. 15,446 crore in group companies in March 2023, the partners must be smiling – their investment has doubled in value within a year.
What remains to be seen is the handling and outcome of the US indictment. If the group emerges unscathed by Uncle Sam abroad, even detractors at home will agree Adani is a hard-to-strike soft target, if not a hard nut to crack.
