Key Adani Group shares recouped much of their intra-day losses on May 22 after taking a knock earlier in the day on a news report saying the group passed off low quality coal for cleaner, more expensive coal in its dealings with a state-owned power company.
Financial Times said it accessed evidence collected by the Organized Crime and Corruption Reporting Project (OCCRP), that supported its allegations of the Adani group artificially inflating coal prices.
The Gautam Adani-led conglomerate's flagship firm Adani Enterprises saw its share price fall 1.4 percent intraday, but recouped its losses to trade flat.
Shares of Adani Ports also skidded 1.5 percent in trade, but trimmed the loss later on May 22. At 1 pm, the shares were was quoting at Rs 1,378.85 apiece on the NSE, down 0.48 percent.
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Citing certain invoices, FT reported that in January 2014 the Adani Group bought coal that contained 3,500 calories per kilogram from Indonesia.
The Adani Group bought the coal from an Indonesian mining firm, PT Jhonlin, which is known for its low-grade coal at the cost of $28 per tonne.
This shipment was then sold to the Tamil Nadu Generation and Distribution company (Tangedco) as high-quality coal of 6,000-calorie per kilogram, said FT. This was sold for an average price of $86 per tonne, indicating a 207 percent jump in prices.
The report further suggested that the group inflated the grade of coal in 22 other shipments in 2014, which supplied 1.5 million tonnes of coal to Tangedco.
Factoring in freight, transportation and logistics costs, the Financial Times alleged that the Adani Group, along with conspirators, clocked $46 per tonne in profit, totaling $70 million for 22 shipments.
Adani Group denied these allegations. "With the supplied coal having passed such an elaborate quality check process by multiple agencies at multiple points, clearly the allegation of supply of low-quality coal is not only baseless and unfair but completely absurd,” said an Adani Group spokesperson to the Financial Times.
On January 24, 2023, short seller Hindenburg Research published a report that alleged non-compliance of minimum public shareholding, non-disclosures of related party transactions, or stock price manipulation, among others.
This resulted in the conglomerate’s stocks plunging and the cancellation of the Rs 20,000 crore follow-on public offering of Adani Enterprises. However, Adani Group had repeatedly denied these allegations.
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