Gautam Adani’s firm inflated coal price for Rs 603 cr ‘profit’, electricity price hike: Media report

In the past, the Adani Group has rejected similar claims of overvaluing the import bills for coal and equipment for running thermal power plants, first being detected by the DRI in 2016.

| Updated: 13 October, 2023 7:53 pm IST
Foreign-based media outlet, Financial Times' recent report accuses Adani group of overvaluation of coal imports for his power plants

NEW DELHI: Fresh troubles have mounted for Indian conglomerate Adani Group, led by its billionaire promoter Gautam Adani, who was earlier accused of pulling off “the largest con of corporate history”, after a media report has said that his company inflated prices of imported coal worth Rs 530-crore, which could have forced Indians to pay more for electricity from the firm.

According to a report in the Financial Times, his company Adani Enterprises that supplies power to several states like Maharashtra and Gujarat, has manipulated the bills for the import of coal from Indonesia and other countries.

The FT report said it has detected major alteration in the valuation of 30 coal shipments from Indonesia, among other countries, over a period of 32 months between 2019 and 2021 – during the travel of coal stock between source and its destination. The report estimates overvaluation in the range of 50-100 per cent in different cases to a total sum of $70mn or Rs 583 crore.

The FT report has also accused Adani of using offshore intermediaries in Taiwan, Dubai and Singapore to import $5bn or Rs 40,000 crore worth of coal at prices that were at times more than double the market price. One of these companies is owned by a Taiwanese businessman who was recently named by the FT as a substantial hidden shareholder in Adani companies.

READ MORE: Adani saga: Centre agrees to set up panel on protecting investors

A specific case cited by the FT describes how prices were manipulated mid-sea by the Adani Enterprises.

In January 2019, the DL Acacia, a 229m-long bulk carrier with a South Korean owner and Panamanian flag, departed the Indonesian port of Kaliorang in East Kalimantan carrying 74,820 tonnes of thermal coal. The coal was valued at $1.9mn or Rs 15.8 crore in the export invoice, with another $42,000 (nearly Rs 35 lakh) for local costs.

However, upon arriving at India’s biggest commercial port, the Mundra port in Gujarat, that managed by the Adani group, the declared import value rose to $4.3mn or Rs 35.8 crore.

READ MORE: Hindenburg report mix of misinfo, discredited allegations: Adani

The FT report, further accused Adani group of, jump in declaration of value to customs officers in India  to $215mn, suggesting the voyages made up to $73mn (Rs 603 crore) in profits, far in excess of plausible shipping costs.

In the past, the Adani Group has rejected similar claims of overvaluing the import bills for coal and equipment for running thermal power plants, the first being detected by India’ Directorate of Revenue Intelligence (DRI) in 2016.

Adani Group has again denied the charges, both those levelled by Hindenburg and then of coal import over-pricing by the Financial Times, saying they have been vindicated by the Directorate of Revenue Intelligence (DRI’s) decision this year to withdraw an appeal to the Supreme Court.

“The issue of overvaluation in the import of coal was conclusively settled by India’s highest court of law….” the Adani group has said.

In 2016, an investigation was launched against the Adani Group, along with 40 other companies, by the DRI for overvaluing imports for the construction of their coal and power plants.

Two show-cause notices were sent to the energy-to-port behemoth in 2014 and one more in 2016.

On its part, the business group says the 2016 case was settled in the Supreme Court in the month of March this year. The agency had withdrawn its application against an order of the Adjudicating Authority of the DRI dropping all penal proceedings against the group on charges of inflating equipment and coal by Rs 1,600 crore.

READ MORE: Rahul attacks Adani, but Congress govts continue to help his business

Adani has been caught in the cross hairs of opposition Congress party, which now leads the INDIA alliance, over alleged favouritism in lucrative crucial deals under the incumbent government. However, it is also true that he enjoys similar camaraderie with Rajasthan CM Ashok Gehlot and NCP’s Sharad Pawar, who is himself a partner of INDIA alliance. The recent photo-ops of Pawar and the billionaire businessman had left everybody clueless on the attack by Rahul on Adani group.

Earlier this year, Adani’s business empire was accused of stock manipulation and corporate fraud by US-based short seller Hindenburg Reserch.

He had discussed those allegations as falsehood and accused the firm of attacking Indian economy and its companies for financial benefits.

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