* Adani to kick-start Australia project

After mega restructuring, Adani to work on financial closure of Australian project

The Adani group is working on the financial closure of its Australian coal mining
project, which needs investments of $8 billion and is facing local environmental
protests.

Analysts said capital expenditure for the Galilee mine in Queensland would start
soon and Adani Enterprises would invest $3 billion in the next four years apart
from the $1 billion it already had. The project comprises a mine, a railway and a
port. The total investment in the project will be around $16 billion, making it
biggest mine development in history.

The Adani group’s recent equity restructuring has made it easier to raise loans at
favourable rates.

The Adanis’ private entities and Korea’s POSCO, which will build the railway, will
spend $1.5 billion on the port $2.5 billion on the railway, according to analysts
with Axis Capital. “This (equity restructuring of the Adani group) could be a
precursor for the promoters to monetise part of the holding in the port business
to support the power and mining businesses,” said an analyst with Axis Capital.

The Australian project is the most ambitious one by Gautam Adani, the Adani
group’s promoter. With a pro-business government at the Centre led by Prime
Minister Narendra Modi, the group is expected to tie up funds for the project
soon. The State Bank of India promised $1 billion after most other banks refused
to lend for the Queensland project.

The coal mine is being opposed by locals and environmentalists who claim the
project is not only uneconomical but also not conducive to the environment. The
Guardian reported on Monday a new Labour government in Queensland had
backed out of investing $450 million in the railway. The Labour party also said it
would not fund dredging at the Abbot Point port unless the Adani group
demonstrated the project was viable.

An Adani spokesperson told The Guardian the company was “committed to

proceeding with its mine, rail and port projects that are key to opening up the
Galilee Basin”.

The Adani group is now in a better position to start work on the project. In the last
one year, the group’s market capitalisation has climbed 134 per cent to Rs 154,622
crore. Last week’s equity restructuring had worked in favour of shareholders,
analysts said.

However, Tim Buckley, director of energy finance studies for the Institute of
Energy Economics and Financial Analysis, said Adani would most likely exit the
Australian project by the middle of 2015 and invest in the opportunities the Indian
government was presenting in wind, solar and grid transmission within India.

Equity recast is good: CLSA, Morgan Stanley

The demerger plan of Adani Enterprises has received a thumbs-up from global
brokerage firm CLSA and Morgan Stanley. CLSA said Adani’s plans to demerge its
businesses into four listed entities would create value by eliminating the holding
company discount and bringing focus on some of its under-appreciated
businesses. The brokerage sees a 20 per cent upside to the Adani Enterprises
share price after the demerger and has set a target price of Rs 750 a share. On
Monday, Adani Enterprises shares closed four per cent up at Rs 654 a share.
Morgan Stanley said with the restructuring, the five per cent holding company
discount implied in Adani Enterprises's stock based on the January 30 closing
prices of the three companies would reduce further, if not disappear. Also, it said
it was not allocating any value to the transmission business at the moment, and
the spin-off could lead to additional value creation for shareholders.

.
refernces: https://www.business-standard.com/article/companies/main-adanis-
to-kickstart-australia-project-115020201211_1.html

* Adani group shares rally; Adani Enterprises soars

8%
Adani Power soared 7% to Rs 50.65, while Adani Port and SEZ gained
5% to Rs 346 on BSE.

Shares of Adani Group companies such as Adani Enterprises, Adani Power and Adani Port &
Special Economic Zone (SEZ) are back into action and trading higher by up to 8% on the bourses.

Adani Enterprises, the flagship company of Adani Group, is the largest gainer among the pack.
The stock soared 8% to Rs 561 on BSE, on back of over two-fold jump in trading volumes.
Till 1250 hours, a combined 4.28 million shares changed hands against an average sub 2 million
shares that were traded daily in past two weeks on BSE and NSE.

Adani Power has soared nearly 7% to Rs 50.65 on BSE. A combined 10.45 million shares
changed hands on the counter till BSE and NSE.

Adani Port and SEZ gained 5% to Rs 346, also its record high on BSE. A combined 5.61 million
shares changed hands on BSE and NSE.

refernce:

https://www.business-standard.com/article/markets/adani-group-shares-rally-adani-
enterprises-soars-8-115012300509_1.html

*5 reasons why SBI's $1bn lifeline to Adani's Australia

project needs to be questioned
Project viability, environmental battles, funding, high debt and demand
for coal are the key concerns regarding the project.
For anyone who thought Indian banks' appetite to finance big ticket
infrastructure projects had dried up, the news that the State Bank of
India has extended a $1 billion lifeline to finance Gautam Adani's
beleaguered coal venture in Australia might have come as a big
surprise.

SBI's decision, albeit subject to a 'detailed assessment of the company's

mine' has raised several eyebrows, and not merely because of the array
of problems the project poses with regards to environmental concerns,
legality and fundamental viability.
Questions have been raised on social media also on whether Adani was
able to clinch this loan merely as a result of his proximity to Prime
Minister Narendra Modi, given serious doubts raised from several
quarters about the prospects of this project.

Here are 5 reasons that make one question whether financing the
development of Adani's Carmichael mine is in SBI's best interests -

1. Project Viability - A slump in coal prices to five-year lows of $70 a

tonne has put the commercial viability of the project into question. The
US-based Institute for Energy Economics and Financial Analysis
estimated last year that the cost of production is likely to be above the
global thermal coal price for the foreseeable future. Others, like the
author of this column in the Sydney Morning Herald reckon that cash
cost of production roughly equals revenue currently.

Project viability risks were also reflected in Australian firm Linc Energy's
decision to sell its rights to future royalties from Adani at a mere $155
mn when the net present value of the royalty stream has been
estimated at A$600 million. "This implied, Adani and Linc had put a 25
percent to 30 percent probability on the Carmichael project going
ahead" two analysts told Reuters.

2. Stretched timelines, legal tussles & environmental battles have also

put a question mark on whether Adani can stick to its revised 2017
timeline, despite receiving both federal and state approvals for its mine.
IEEFA estimates full production will happen only by 2022 and has
warned that the company could end up losing $1 billion annually if the
port expansion does not proceed in accordance to the timelines the
company has set out. "I think Adani will move slower with Carmichael
than they say...There are many risks," an analyst with a broker in
Mumbai was quoted by Reuters as saying.

One of which is legal. Despite Australia’s Queensland state granting all

environmental clearances to the project, the company is still battling it
out with green campaigners in courts, who are arguing that dredging
activities by the company pose threats to the Great Barrier Reef. This
makes ruling out future litigation risks difficult.

3. Other banks are staying away from the project precisely because of
such risks. Greenpeace had said in July that the Royal Bank of Scotland,
Deutsche Bank and HSBC had distanced themselves from Adani’s
venture citing potential environmental damages. ABC reports that
Goldman Sachs, Citigroup and JP Morgan Chase, in a pre-emptive action
taken last month, have joined the bandwagon, saying they rule out
funding involvement in the project located in Central Queensland's
Galilee Basin. Ironically Morgan Stanley, which Adani had hired to sell a
stake in Abbot Point Coal Port too has expressed concerns on the
environmental impact of the project according to the Wall Street
Journal.

All of this is making it difficult for Adani to secure much needed debt
funding it will need for capital expenditure. The company is still
negotiating with South Korean giant POSCO to secure funding, while the
state government of Queensland, in what is a small spark of good news,
has decided to commit short-term minority stakes in the rail and port
infrastructure.
While the analysts are skeptical, the company is upbeat on raising funds
in time. “People have been very sceptical about the financing of this
project. As we always said, we’ll keep getting this, one by one. The
pieces are falling in place,” Jeyakumar Janakaraj, chief executive officer
of Adani Mining, told Reuters.

4. Unenviable Finances and high debt could be other reasons why Adani
is finding it tough to close the project financially. Despite a rally in its
share price post the elections, Adani Enterprises, the recipient of the
loan is suffering from high leverage and a poor interest coverage ratio as
this Business Standard article pointed out earlier this year. At the end of
the September 2014 quarter, Adani Enterprises had total debt of
around Rs 72000 crore on a consolidated basis, translating into a debt
to equity ratio of around 2.94:1. Adani Mining, the Australian subsidiary
of Adani Enterprises which is undertaking this project is itself a
company 'with $1 billion in debt, negative shareholders funds, zero
revenue and high cash burn' the Sydney Morning Herald noted.

5. Coal Self-Sufficiency - Last but not the least, Power & Coal Minister
Piyush Goyal's comments that India may be able to stop import of
thermal coal in the next 3 years, though hyperbolic, seriously threaten
to knock this project off balance. Adani is expected to export two thirds
of the coal output from Carmichael to India and these assertions by the
Union Minister along with bearish forecasts for a revival in coal prices
which Tim Buckley of IEEFA described as a commodity in 'structural
rather than cyclical decline' don't paint a pretty picture for what the
future heralds for Adani's adventure down under.
First Published: Tue, November 18 2014. 13:31 IST
reference: https://www.business-standard.com/article/companies/5-
reasons-why-sbi-s-1bn-lifeline-to-adani-s-australia-project-needs-to-be-
questioned-business-standard-news-114111800541_1.html

* Adani Enterprises de-merger to create value for

shareholders: CLSA
The brokerage said the plan to de-merge Adani Enterprises will create
value by eliminating holding company discount and bring focus on some
of its under-appreciated businesses.
Adani Enterprises’ de-merger plan has received a thumbs-up from
global brokerage firm CLSA. The brokerage said the plan to de-merge
the businesses into four listed entities will create value by eliminating
holding company discount and bring focus on some of its under-
appreciated businesses. The brokerage sees a 20% upside to Adani
Enterprises share price after the demerger and has set a target price of
Rs 750 a share for AEL.

“The de-merger will also aid in fund raising for Adani Enterprises'
growth businesses on a leaner balance-sheet. We model across–the-
board pick-up in businesses to drive 33 per cent earnings CAGR over
FY15-17 led by economic recovery and turn-around in power business.
Apart from regulatory risk to the proposed de-merger, we see losses in
power and weak seaborne coal markets as key risk to its resources
business,” CLSA said.

On Monday, Adani Enterprises shares were trading 2% higher at Rs 645

a share.
CLSA said Adani’s plan value of its current listed investments in Adani
Port and Power at current market price is Rs 570 or 91% of its current
stock price. Further, the de-merger will sharpen the on some of AEL’s
under-appreciated businesses such as Adani Transmission, which is 8%
of SoTP (sum of the parts) and mine developer and operator Adani
Power. “In worst-case scenario, if we writing-off the Carmichael Coal
mine investments our SoTP falls to Rs 694, leaving 11% upside on
current stock price,” CLSA said.

CLSA said the group has had a great track record of promoting
businesses that create wealth for its owners. For example, on Adani
Ports and SEZ, the group has made 39 times its investment. Similarly, in
the IPP business, the group multiplied its investments 3 times despite
macro and micro challenges. Currently, ADE is incubating highly scalable
businesses – coal mine developer-cum-operator, which is a play on coal
reforms, Carmichael coal mine concession, city gas distribution,
integrated agriculture value chain, and branded edible oils, which could
potentially be value drivers, apart from its free-cash generating coal
trading business.

The brokerage said Adani’s core coal trading and logistics business, in
which it is a market leader, volumes grew 42% YTD (year to date) with
third quarter volumes up 61% on a year-on-year basis on the back of
improved viability of imported coal. The EBITDA (earnings before
interest, tax, depreciation and amortization) per tonne has also
improved to $5.5 a tonne, up 23% in the third quarter of FY-2015 on
lower volatility in currency & commodity.
“We expect that its de-merged balance-sheet shall be much healthier to
raise resources to fund nascent businesses of MDO in India & coal
mining in Indonesia and Australia,” CLSA said. “We see a robust pick-up
in consolidated earnings pre-demerger led by robust ports volumes,
turn in power losses and steady coal trading growth.”
First Published: Mon, February 02 2015. 11:48 IST
refrences: https://www.business-
standard.com/article/companies/adani-enterprises-de-merger-to-
create-value-for-shareholders-clsa-115020200250_1.html

* Adani Enterprises extends rally on restructuring

plan report
At 1100 hours, the stock up 5% at Rs 612, extending its
previous day's 5% rally on BSE.
Adani Enterprises has moved higher by 5% at Rs 612, extending its previous day’s
5% rally on BSE, in otherwise subdued market, on reports that the company is set
to restructure the shareholding of group companies to offer its shareholders
stakes in its listed power and port subsidiaries.

According to a banker, Adani Enterprises shareholders may get 10 Adani Port

shares for every seven shares held. Similarly, Adani Enterprises shareholders may
get 20 shares in Adani Power for every 11 shares held in Adani Enterprises. The
group has already started restructuring by bringing transmission companies under
Adani Transmission.

However, Adani Enterprises on Thursday, January 29, 2015 had clarified to BSE
that "the board discusses various alternatives as may be feasible to pursue. As of
today, there is no such decision taken.”
Adani Enterprises stock opened at Rs 592 and touched a high of Rs 613, its highest
level since September 2011 on BSE. Till 1100 hours, a combined 2.15 million
shares changed hands on the counter on BSE and NSE.

Adani Power (up 2% at Rs 52) and Adani Port (up 1% at Rs 347) are also trading
higher compared to 0.7% decline in benchmark S&P BSE Sensex.
refernces:
https://www.business-standard.com/article/markets/adani-enterprises-extends-
rally-on-restructuring-plan-report-115013000356_1.html

*Adani Enterprises hits 40-month high

The stock up 4.5% at Rs 582, hit a high of Rs 596, also its highest
level since September 22, 2011 on BSE.
Shares of Adani Enterprises have rallied 4.5% to Rs 582 on back
of heavy volumes on the bourses on reports that the company
has planned restructuring to improve balance sheet.

The stock hit a high of Rs 596, its highest level in past 40-
months, during intra-day trade on BSE. Earlier, on September
22, 2011, it touched high of Rs 610 in intra-trade trade.

Till 1500 hours, a combined 5.87 million shares changed hands

on the counter against an average sub 2 million shares that
were traded daily in past two weeks on BSE and NSE.
ALSO READ: Adani Ports Q3 net up 14% at Rs 512 cr

According to report, the company has appointed KPMG as an

advisor to restructuring. Shareholders to get 10 shares for every
7 shares held in Adani Port. Shareholders to get 20 shares for
every 11 shares held in Adani Power. Promoters to get direct
stake in Adani port and Adani power.

In this regard, Exchange has advised the Company to provide

clarification/confirmation on the news item. The response from
the Company is awaited.

Meanwhile, since January 16, the stock has outperformed the

market by surging 17% from Rs 500, after its board has
approved divestment of stake in Maharashtra Eastern Grid
Power Transmission Company (MEGPTCL) to its subsidiary,
Adani Transmission. The benchmark S&P BSE Sensex gained 5%
during the same period.

Among the other group stocks - Adani Power has surged 4% at

Rs 51.60 on BSE. Adani Port and Special Economic Zone up 1%
at Rs 343 after hitting high of Rs 349 during intra-day trade on
BSE.
First Published: Thu, January 29 2015. 15:09 IST
refernces:
https://www.business-standard.com/article/markets/adani-
enterprises-hits-40-month-high-115012900708_1.html

*Adani has a 90-day dream run

The group plans Rs 30,000-cr oil refinery with IOC; buys Lanco's
Udupi power plant for Rs 6,000 cr
The past 90 days have been a dream run for Gautam Adani,
chairman of the Ahmedabad-based Adani group. The 52-year-
old billionaire had on May 16 announced a Rs 5,522-crore
takeover of Odisha's Dhamra port from Larsen & Toubro and
the Tatas. The same day, the Narendra Modi-led Bharatiya
Janata Party won the Lok Sabha elections. He has now followed
it up with another acquisition - of Lanco's Udupi power plant for
Rs 6,000 crore.

And that's not all. Media reports suggest the group plans to set
up a Rs 30,000-crore oil refinery in association with Indian Oil,
putting in land as equity, besides a Rs 4,500-crore liquefied
natural gas terminal with GSPC. The group has also received the
long-awaited environmental clearance for its Mundra special
economic zone.
ALSO READ: Udupi Power to de-risk Adani's portfolio

Good news just kept pouring in for Adani, as he received the

Australian government's approval to develop a coal mine for as
much as $16.5 billion - despite stiff opposition from Greenpeace
and natives.

While governments are rolling the red carpet for Adani,

shareholders are not complaining, either. The market value of
the group's listed companies has risen Rs 8,660 crore since the
election results were announced on May 16.

Clearly, Adani, who was under attack from Congress Vice-

President Rahul Gandhi in the run-up to the polls, is now a man
on a mission.

The group is also bidding to provide piped gas to 14 cities in

association with Indian Oil Corporation, apart from other
initiatives. And, if bankers are to be believed, Adani is on the
prowl for more assets in the power sector.

Interestingly, Reliance Industries, controlled by Mukesh Ambani,

another businessman targeted by Gandhi, has lost Rs 16,477
crore of its market value in the past three months.

Adani's rise coincided with Modi's as Gujarat chief minister. The

group's revenue grew at a compound annual rate of 25 per cent
from Rs 3,700 crore in 2001-02 (Modi took charge as CM in
October 2001) to Rs 55,000 crore by the year ended March
2014. The group's net profit rose at CAGR of 31 per cent from
Rs 84 crore in 2002 to Rs 2,220 crore this year. During this
period, Adani, who started as a trader, built a world-class port
and a special economic zone in Gujarat's Mundra. Adani also set
up power projects across the country, including in Odisha,
Chhattisgarh, and Maharashtra.

During the past 12 years, the Adani juggernaut has continued to

roll in India and he has also focused abroad - he bought coal
mines in Indonesia to fuel his power stations in India. In 2011,
Adani took a big step forward by buying Abbot Point coal
terminal in Australia for $2 billion. The port was later taken over
by the promoters, as analysts raised objections over the high
debt of the company. The group's debt, at the same time, also
rose to a massive Rs 78,000 crore.

PURPLE PATCH?
Adani's key announcements since election results
 May 16: Adani Ports & SEZ buys Dhamra Port from L&T and
Tata Steel for Rs 5,522 cr
Jul 16: Adani gets environmental clearance for Mundra SEZ
Jul 22: APTEL allows Adani to charge higher rates from state
utilities
Jul 27: Australia approves Adani‘s $16.5-bn Carmichael coal
mines
Aug 9: Adani says it will build Rs 30,000-cr oil refinery with
IOC
Aug 10: Adani says it will build Rs 4,500-cr LNG terminal in
Mundra with GSPC
Aug 12: Adani and IOC bid to supply piped gas in 14 cities
Aug 13: Adani buys Lanco’s Udupi power plant for Rs 6,000 cr
First Published: Fri, August 15 2014. 00:57 IST
refrences: https://www.business-
standard.com/article/companies/adani-has-a-90-day-dream-
run-114081500005_1.html

*A few politicians are making wild allegations

against entrepreneurs: Gautam Adani
Interview with Chairman, Adani Group
Adani Group Chairman Gautam Adani, 51, is under attack from the Congress for
his proximity with Bharatiya Janata Party’s prime ministerial candidate Narendra
Modi. In an email interview with Dev Chatterjee, Adani rejects the allegation that
he was allotted land to his group’s infrastructure projects at a discounted rate.
Excerpts:

The Adani group has been accused of getting land almost free from the Modi
government in Gujarat. What’s your defence?

We have been developing a port and a special economic zone in a phased manner
at Mundra in Gujarat since 1993. Since then, different governments have allotted
land during different phases of development after assessing the need and
complying with all procedural requirements. We have not received any concession
in land allotment.

A sizeable part of the land was allotted during the Modi regime...

The said land was owned by the government and was absolutely barren and unfit
for agricultural activity. We have never acquired any private agricultural land
through the government’s acquisition route. There is not a single instance till date
where the valuation at which government land has been allotted to us has been
proved to be incorrect.

But how do you defend the fact that you got land almost free?

It is unfair if one compares the price of the land before and after development.
We have developed the land during the past 20 years by investing over Rs 50,000
crore and creating world-class infrastructure. We have no clue why we have been
targeted. One of the reasons might be that we are one of the largest Gujarat-
based infrastructure companies and, hence, we have become a soft target.

Are you dismissing everything as political rhetoric?

There were no such wild and baseless allegations against Adani or any other large
business house, which have significant presence in Gujarat till the elections were
announced and the campaign started for this year’s elections.

The Congress has identified you as the main beneficiary of Modi’s largesse.

We are witnessing that a couple of politicians are making wild and baseless
allegations and are attacking entrepreneurs, for the first time in the country’s
history. We do respect the views and opinion of all political parties. However, in
this politically-charged atmosphere, personal attacks are either politically
motivated or due to poorly informed and ill-advised individuals. This is
disheartening and discouraging.

Do you expect these attacks to stop after elections?

We have made huge investments in infrastructure projects in Gujarat, Rajasthan,
Maharashtra, Chhattisgarh, Odisha and Haryana. These investments are in the
infrastructure sector and need clear government policies and cooperation for their
implementation. Hence, we need to work closely with the government. We are
getting excellent support from all states, irrespective of different ruling parties.
This is normal as this sector is the priority sector for the government and is the
backbone of the growth for the economy. I hope these allegations will gradually
subside.

You are making a massive investment of $10 billion in Australia. Is this due to
increasing political risk in India?

The investments in Australia are to augment energy resources of the country.

India has the third-largest reserves of coal in the world but due to extensive and
elaborate procedures coupled with slow decision making, we have been lagging in
coal mining. The investments by Indian companies, including Adani, outside India
in coal mining are to ensure India’s energy security.

Latest statistics show that new projects in India are consistently falling and
entrepreneurs are unwilling to start new projects? What’s your take on this?

The investments in new projects have slowed down as there is widespread

administrative indecisiveness coupled with ambiguities on policy matters. The
government is finding it difficult to defend its own policy many a times.

These are on account of coalition compulsions, unwarranted debates; hyper

activism by environmentalists, litigation etc. The other major concern is inflation,
which has led to stiff interest rates on debt for projects. This further erodes
financial viability of projects and acts as a deterrent to new investment.
In few weeks, a new government will take charge in New Delhi. What will you
suggest to the next government to expedite infrastructure projects in India?

The primary job of the next government at the Centre is to speed up the decision
making process by formulating clear-cut policies coupled with speedy
implementation of the same.

Secondly, I expect it to minimize government and maximize governance through

policy initiatives like setting up independent apolitical sector regulators. Finally,
the government should support industry and trade in the international markets,
specifically to protect its interests.

India is land of opportunities and the need of the hour is to invite entrepreneurs
to participate in the growth story through well defined and transparent PPP
(public, private partnerships) initiatives.

We, therefore, hope the next government focuses on speeding up decision

making and acting as an enabler for removing the hurdles in project execution. If
we just focus on this, the confidence of investors both in India and abroad would
increase, investments would start flowing and jobs would get created. This would
be the biggest multiplier enabling the growth of our economy.

Adani group has emerged as India's largest power company as well Port Company.
How did you manage to accomplish this feat?

We have focused our efforts in timely completion of projects, and creating

capacities ahead of demand. Secondly we have opted for efficiency in all our
endeavors.
In port sector, we have set up world’s largest fully mechanized coal import
terminal to ensure highest efficiency at lowest cost. In power sector we have
commissioned country’s first energy efficient and environment friendly super
critical power plant.

We take 360 degree view of the project and start working towards removing
external bottle necks parallel to our project implementation. In port sector to
ensure evacuation of goods, we had set up private railway track to connect
Mundra with national railway network in 2002, the same has been expanded by
doubling the lines in 2013 to take care of increased cargo.

Similarly for our power projects, we have set up close to 2,000 KM of electricity
transmission lines for evacuating power from our plants in Mundra as well as
Tiroda. All this ensures that assets build at huge cost do not idle due to external
constraints.
First Published: Sat, May 03 2014. 00:48 IST
refrences: https://www.business-standard.com/article/companies/a-few-
politicians-are-making-wild-allegations-against-entrepreneurs-gautam-adani-
114050200826_1.html