French energy giant Total acquires 37.4% in Adani Gas for Rs 5,152 crore

French energy giant Total on Friday acquired 37.4 per cent stake in Gautam Adani-led Adani Gas, in a bulk deal worth Rs 5,152 crore.

Through the deal, Total Holdings SAS bought a stake from several Adani Group companies — including Adani Tradeline, Afro Asia Trade and Investments, S B Adani Family Trust, Universal Trade and Investments and Worldwide Emerging Market Holding.

In October last year, Total had announced its plans to buy Adani Group’s stake in Adani Gas through a mix of open offer and purchase from promoters. It was only on February 21 this year that the deal got the approval of the Petroleum and Natural Gas Regulatory Board (PNGRB).

The downstream regulator had raised doubts and issued a show cause notice, given there were restrictions in the restructuring of city gas distribution (CGD) companies within five years of the licence being granted. The nod to PNGRB was given considering the importance of foreign participation in the CGD segment, and the need to expand the country’s network.

Total had said late last year that CGD was a natural extension of the plans of both partners to invest in infrastructure and assets worth over $1 billion, which included Liquefied Natural Gas (LNG) infrastructure, as well as the marketing and fuel retail business.

Adani Group has city gas network operational in five cities, and has 84 compressed natural gas (CNG) stations in these areas.

It is also in the process of setting up a network in 14 other geographical areas (GA). It has eight operational GAs in a joint venture with Indian Oil Corporation (IOC), while 11 are in the implementation stage.

Adani Gas is also planning to set up 1,500 fuel stations, offering top-of-the-line products in the coming years. The expanded partnership will develop regasification terminals, including Dhamra LNG, on the east coast of India.

Adani group joins race to buy Air India, plans to submit EoI by next month

The Adani group will join the race to acquire Air India and plans to submit an expression of interest (EoI) by next month, said a source close to the development.

The final decision of Adani will, however, depend on the outcome of the due diligence after submission of the EoI. After the EoI process, prospective bidders will get access to data of the airline.

Apart from the Adani group, the Tata group, the Hinduja group, Indigo and a New York-based fund, Interups, are expected to submit EoIs.

The Adani group has ambitions to become India’s largest private airport operator with three airports already in its kitty – Lucknow, Ahmedabad and Mangalore. It has also won the race for three more airports – Thiruvananthapuram, Ahmedabad and Guwahati – but is awaiting government clearance.

A spokesperson of the Adani group declined to comment.

Analysts, however, feel that the group’s bid for Air India could face legal challenges given its ownership of airports.

While there are no restrictions on an airport developer to bid for Air India, bid conditions for six Airport Authority of India (AAI) airports won by the Adani group place ownership caps.

According to the bid criteria, an airline or a group owning an airline cannot own more than 27 per cent in these six airports. This could complicate matters for the Adani group.

A similar clause restricting airlines or group owning airlines from owning more than 10 per cent in Delhi airport recently resulted in collapse of the Tata-GIC group’s investment in GMR.

A banker, close to the sale process of Air India, said the present rules will not bar the Adani group from bidding for the airline. “We want as many companies to bid for the airline as it is a good asset after Rs 30,000 crore of debt was removed from the airline along with the government’s offer for 100 per cent stake,” said the source.

This is the second attempt made by the Centre to sell the airline after it failed to receive buyers in the first round last year.

Since then, the government offered to sell 100 per cent of the airline’s stake instead of 76 per cent offered in the first round.

Air India and its subsidiary, Air India Express have about 120 aircraft at FY18-end and 126 aircraft till September last year. Its fleet has both narrow-body aircraft from Airbus and wide-body planes from Boeing, making it simpler for an incoming bidder.

While the wide-body fleet is being used for international operations, the airline is using the narrow-body planes for domestic operations.

Sale of Air India to a private player is important for the central government as it had to pump in Rs 30,000 crore of tax payer’s money into the airline since 2012. The airline, however, has not made money since the merger of Air India and Indian Airlines in 2007.

Apart from Air India, the government has also offered to sell Air India Express and its 50 per cent stake in Air India SATS Airport Services.

According to present aviation sector norms, foreign airlines can bid but acquire a maximum of 49 per cent stake due to sectoral caps on foireign direct investment.

Adani's Rs 400 crore bid for posh Aditya Estates in Delhi gets NCLT nod

Business conglomerate Adani group has won a bid to acquire Aditya Estates Pvt Ltd, which holds a posh 3.4 acre residential property near Mandi House in the heart of the national capital, through an insolvency process for a total deal value of Rs 400 crore.

The Delhi-based Principal bench of the National Company Law Tribunal (NCLT) has approved the resolution plan of Adani Properties to acquire Aditya Estates for Rs 265 crore. Another Rs 135 crore would go towards meeting the statutory charges, taking the total deal value to Rs 400 crore.

The Committee of Creditors (CoC) of Aditya Estates led by ICICI Bank PLC had already approved by 93.01 per cent vote share, Adani's Rs 400 crore offer, which includes an upfront payment of Rs 265 crore.

According to the list of resolution applicants submitted on June 27, 2019 nine resolution applicants had shown their interests for the property, which include Narayana Murthy,Malvinder Singh, Anil Rai Gupta, Paras Pramod Agarwal besides others as Dalmia Cement (Bharat), Veena Investments, Welspun Logistics, Adani Properties and Panch Tatva Promoters.

However, only two of them -- Adani Propertiesand Veena Investments -- had submitted their resolution plans.

Later, the COC rejected Rs 225 crore offer from Veena Investments as it found it to be non-compliant and conditional. Besides, it did not take into account any liability that may arise from NDMC for house tax, sales tax and Income Tax in future.

During the ?nal hearing while granting approval to the sale, Spirit Infrapower, a dissenting ?nancial creditor had raised objection before NCLT on the ground that the Adani group firm has reduced its offer from Rs 400 crore to Rs 265 crore, thereby the main object of the IBC Code to maximise the value of assets of the Corporate Debtor has been defeated.

It has also contended that the liquidation value of the property was Rs 306 crore and the resolution plan was much lower sum of Rs 265 crore.

However, the resolution professional and CoC submitted that the reduction/adjustment was done to meet the liabilities arising out of the transaction payable to NDMC for conversion of property tofree hold, property tax, stamp duty and other related charges.

As per the request for resolution plan (RFRP) was to provide a resolution plan to acquire on an as is where is basis, resolution applicants were asked to de-link the risks and to remove contingency and uncertainty.

The rational for reduction of the financial proposal is as per the estimates. The cost of conversion and other associated payments were estimated at Rs 177 crore and can exceed beyond it, they submitted.

Accordingly, the financial proposal was reduced from conditional Rs 400 crore to ?xed upfront payment of Rs 265 crore, which was accepted by CoC with overwhelming majority of 93.01 per cent votes," it said.

Over the valuation, RP and CoC said that Aditya Estates Private is a the leasehold immovable property and the property is held on a leasehold basis from the Land and Development Office, Ministry of Urban Housing Affairs (L&DO).

It further said that the liquidator had said that buyer would have to pay the conversion charges to L&DO and after considering this, the liquidation value of the property is reduced to half by Rs 153 crore.

Allowing the deal and rejecting dissenting financial creditor's submission, NCLT in its order passed on February 14 said: It is well settled proposition of law that commercial and business decisions of CoC are not open to judicial review. Adjudicating Authority (NCLT) cannot enquire into the commercial wisdom of CoC.

NCLT has directed to appoint a monitoring committee' comprised of ?ve members constituting RP and two representatives of Adani Power and approving ?nancial creditors.

Earlier, NCLT had on February 26, 2019 had admitted the plea filed by ICICI Bank UK PLC to initiate insolvency proceedings against Aditya Estates.

ICICI Bank UK PLC claimed to be a financial creditor of Aditya Estates on account of debt of USD 63 million granted to Assam Oil Company, an overseas company. It had contended that as per terms of debt asset swap agreement Aditya Estates defaulted to pay the debt.

Later, NCLT order to initiate insolvency was challenged by Aditya Kumar Jajodia, a shareholder of Aditya Estates, before National Company Law Appellate Tribunal (NCLAT), which also rejected in September 5, last year.

Siemens will back controversial Australian coal project: CEO Joe Kaeser

German engineering group Siemens said on Sunday it will fulfil its contractual obligations to a controversial coal mining project in Australia's outback, despite criticism by climate activists including Greta Thunberg.

Siemens was awarded a contract last year to provide signalling technology for a railway line to transport coal from a coal mine run by India's Adani Group in the outback.

The German company had said it would decide by Monday on its involvement in the project.

On Saturday Thunberg called for Siemens to review its role in the project.

"There is practically no legally and economically responsible way to unwind the contract without neglecting fiduciary duties," Siemens Chief Executive Joe Kaeser said in a statement.

Local and federal governments approved the project based on the Environmental Protection and Biodiversity Conservation Act 1999 as well as hundreds of pages of environmental impact statements, Siemens said.

"While I do have a lot of empathy for environmental matters, I do need to balance different interests of different stakeholders, as long as they have lawful legitimation for what they do," Kaeser said.

"Keeping our promises is Siemens’ highest priority. Only being a credible partner whose word counts also ensures that we can remain an effective partner for a greener future." Environmental activists are concerned that the continued use of coal will lead to higher emissions of carbon dioxide, a gas which is linked to global warming.

Siemens said that it had pledged to achieve carbon neutrality by 2030 and it fundamentally shares the goal of making fossil fuels redundant over time.

Adani Group shares rally; Adani Gas, Adani Transmission surge 12%

Shares of Adani Group companies were in focus on Friday and rallied up to 12 per cent intra-day on the back of heavy volumes on the BSE in an otherwise weak market.

Adani Gas (Rs 168) and Adani Transmission (Rs 315) rallied 12 per cent each on the BSE. Adani Power (up 8 per cent at Rs 66.60), Adani Green Energy (5 per cent at Rs 139), Adani Enterprises (4 per cent at Rs 221) and Adani Ports and Special Economic Zone (3 per cent at Rs 384) were up in the range of 3-8 per cent on the BSE.

Of these, Adani Enterprises, Adani Green Energy, and Adani Transmission hit multi-year high in intra-day trade today. In comparison, the S&P BSE Sensex was down 0.66 per cent or 271 points at 40,854 at 10:42 am.

The trading volumes on the Adani Gas counter jumped over 10-fold with a combined 6.2 million equity shares changing hands on the NSE and BSE so far. Moreover, Adani Ports and Adani Transmission counters saw their trading volumes more-than-doubled today.

According to a PTI report, the Competition Commission on Thursday said it has given approval to the acquisition of 37.4 per cent shareholding and joint control by Total Group in Adani Gas.

The proposed combination represents an investment opportunity for Total along with its subsidiaries and affiliates (Total Group) given the future of natural gas business in India.

Adani Group partners with US-based firm to build data centre infra in India

Adani Group on Tuesday said it is partnering with San Francisco-based Digital Realty to develop and operate data centre infrastructure across India.

Under the agreement between Adani Enterprises and Digital Realty, the two parties will "jointly evaluate developing and operating data centres, data centre parks and cultivating undersea cable provider communities of interest across India," a statement said.

Digital Realty is a global provider of data centre, co-location and interconnection solutions.

"The collaboration would leverage Digital Realty's extensive experience and industry-leading solutions for their global data centre customer base along with Adani's expertise in full-stack energy management, renewable power, and real estate development and management," the statement said.

The strong engineering and project management capabilities of the two companies will also enable this partnership to execute effectively in a complex environment and deliver facilities on time with the required high uptime levels, it added.

"Data centre infrastructure is critical to enable a Digital India and this partnership leverages several of the capabilities developed by the Adani Group...our ability to power our data centres with solar and wind energy is unique and addresses some of the challenges of building and operating data centres," Adani Group Chairman Gautam Adani said.

Digital Realty Chief Executive Officer A William Stein said the company is excited by the opportunity to enter the Indian market with the Adani Group.

"We are strongly committed to working with Adani to build out a world-class data centre network in India to support the growth of our global and Indian customers," he added.

Adani Group likely to acquire 72% stake in Andhra's Krishnapatnam Port

The Adani Group is likely to acquire a 72 per cent stake in Krishnapatnam Port Company Limited (KPCL), the operator of Krishnapatnam deep water sea port in Andhra Pradesh. The two parties have signed a confidentiality agreement in this connection. Unconfirmed reports put the proposed deal value at over Rs 5,500 crore.

Promoted by Hyderabad-based CVR (Navayuga) group, KPCL had developed the green-field Krishnapatnam Port project ten years ago under a concession agreement signed with the Andhra Pradesh government.. The port, which commenced operations in April, 2008, has handled 54.37 million tonnes of cargo in 2018-19.

The proposed acquisition also includes an equity stake held by international private equity investment player 3i Group, which had invested little over $160 million in the company during the early days of port operations. Post acquisition, Navayuga group will retain 28 per cent in the port company besides a key management role either as chairman or as a managing director, according to sources.

"KPCL managing director Chinta Sashidhar of the promoter group will hold the position of chairman or MD after the acquisition as desired by Adanis," a top source in the company told Business Standard. There was no clarity yet as to when the deal would conclude as the process of due diligence is just underway.

Port operations in Andhra Pradesh have been on Adani Group's radar for quite some time. The country's biggest private port operator had tried to acquire Gangavaram Port about 2-3 years ago. Its efforts in this regard did not make a head way as the promoters of Gangavaram port were unwilling to divest their stake. Last year Adani Group had won the green-field Bhavanapadu Port project in Srikakulam district of Andhra Pradesh.

Navayuga group's decision to sell majority stake in its flagship port company comes in the wake of a stressed out financial situation being faced by this privately held infrastructure player. Two of its projects in Andhra Pradesh- a large Rs 4,500 crore construction contract of Polavaram Project and the development of Machilipatnam Port project- were recently cancelled by the new government headed by chief minister Y S Jagan Mohan Reddy.

The Krishnapatnam port also undergone deep financial turmoil in the past when iron ore exports, one of the major bulk cargos that it handled early on, completely stopped. Later it was also impacted by the economic slowdown. Operations picked up momentum in the last few years with the rise in coal imports required by the large coastal thermal power projects in its catchment area, besides other bulk cargo such as edible oil and container terminal operations.

Besides well-developed port infrastructure, the port company also has around 1,300 acres of land that can be used for the development of port-based industries.

Promoted by founder C Visweswara Rao, the CVR Group has a turnover of $1 billion and an order book of $10 billion consisting of power, steel, port development, IT and exports, according to the company website.

Adani finds mine-development contracts more promising than trading

Adani Group built its fortunes by starting as a commodity trading company. But, Adani Enterprises — the flagship company of the three-decade-old trading group — now sees mine-development contracts as more promising than trading.

“As we grew, we also looked at how to best utilise our capabilities. Our mine development and operation (MDO) business is growing faster than trading,” said Jugeshinder Singh, chief financial officer, Adani Enterprises. He expected the company’s bulk handling to be higher from the MDO contracts, compared to trading.

In 2006, Adani Enterprises was awarded its first MDO contract. At present, Adani Enterprises is India’s largest MDO operator. The company has one fully operational MDO; two more MDOs have started and another seven are under development. “One of the seven will start operations in the next financial year,” Singh said.

According to the firm’s presentation, washed coal dispatch volume during the June 2019 quarter was at 2.4 million tonnes from its mining and services division. Volume from its integrated coal management or coal trading was at 18.5 MMT in the same quarter.

For the June quarter, Adani Enterprises reported a segment profit of Rs 347.93 from coal trading and Rs 239.31 crore from mining. Segment liabilities, however, for the coal trading business was at Rs 10,256.54 and the mining business was at Rs 1,376.06 crore. “Based on the projects at hand, you can safely say that our MDO business would be north of 100 million tonnes,” he said. Its MDO contracts span across Coal India’s mines, blocks won in auctions from private companies and other state utilities.

The company’s coal trading business will get a fillip once production from the Australian Carmichael mine starts likely in one-and-a-half years. "In terms of trading, Carmichael mine will come online in April-June 2021; until then, the coal handling will be in the range of 60-65 million tonnes,” Singh said.

The official said the entire expected output of 11 million tonnes from the Australian mine in the first phase of production will be used at Adani’s power plants in India. The group’s thermal power assets are held under a separate listed entity-Adani Power.

In addition to its core coal business, Adani Enterprises has entered several new businesses in the past two years, including water, transport and airports. The management, however, plans to hive off these businesses as listed entities once they mature. “Everything else (other than coal and Adani-Wilmar) is a business that we will incubate and then shelve it out like Adani Green and Adani Gas, which are listed entity verticals,” Singh said. Adani-Wilmar is a 50-50 joint venture, which owns the edible oil brand Fortune.

Adani Group to invest Rs 5,500 cr in UP's food processing, power sectors

Adani Group will invest Rs 5,500 crore over the next five years in power transmission and food processing sectors in Uttar Pradesh, its chairman Gautam Adani said on Sunday.

Speaking on the occasion of the second ground breaking ceremony that will see the launch of multiple projects by corporates, Adani said he had announced his investment plans during UP investors' summit in February 2018 and the work on two power transmission projects has already started.

Under the food processing segment, rice and flour mills, kachchi ghani refining facility will be set up in the state, he said.

"In the next five years, the group is planning to invest Rs 5,000 crore in power transmission and another Rs 500 crore in food processing sector," Adani said.

Talking about his plans to focus also on other areas such as data centre and defence, he said that going by the size, population and strategic location and demographic dividend of the state, Uttar Pradesh can emerge as a leader in these sectors as well.

"...our presence in the defence sector is very important for us. It is my dream that Adani Group sets up world-class defence manufacturing hub in the defence corridor in Uttar Pradesh," he said.

Saying that his group has set up units having the capacity of 15,000 metric tonne in Kannauj for improving the foodgrain storage capacity in the state, he said it was already working on developing multi modal river terminal in Varanasi for enhancing the waterways.

Underlining that the development story of the country is incomplete without Uttar Pradesh, Adani said the state is being viewed as the fastest changing and it will play an important role in reaching the target set up by Prime Minister Narendra Modi of $5 trillion economy by 2024.

Adani Group hits back at Australian critics, will go ahead with project

The Adani Group has said it has invested $3.6 billion in the Australian coal mines and its accounts are cleared by top auditors and tax officials across various geographies, including Australia.

Reacting to an Australian media report, which quoted a University of Sydney professor alleging that Adani Mining, the Australian subsidiary of Adani group, is in a very fragile and perilous financial position, the group said several anti-coal mine activists are discrediting the company and its operations. But it will continue to go ahead with the project.

Professor Sandra van der Laan, a forensic auditing specialist at the university, said the current assets of Adani Mining are less than $30 million and its current liabilities are at $1.8 billion.

Adani’s Australian coal mine is surviving on a lifeline from its Indian parent — Adani Enterprises — which has promised to extend financial support to the Australian subsidiary for at least 12 months, van der Laan told ABC. She said the accounts show the owners have contributed less than $9 million in equity to the business, and the total liabilities exceed the total assets by more than half a billion dollars.

But Adani Group said like any greenfield project, the coal mine project will not generate income until the mine and rail are built and operating, and the coal can be sold and exported. “Until we start producing and selling coal, we will be continuing to invest in the development of the mine and rail and therefore, this will be treated as an accounting loss,” said the Adani Group.

The Adani Group has an ambitious plan to mine in Queensland, Australia, and then export it to India. It will also construct a railway line from the port to the coal mine in Australia. The project recently received all clearances from the Australian government and it is now mobilising suppliers to start the project.

The Adani Group said over the past nine years, its contractors, employees, consultants, and other business partners have been paid. “Our operations are Australian businesses, operating under Australian financial regulations and taxation legislation,” it said.

“Like other Australian businesses, our accounts are annually audited and tested for matters such as insolvency and assessed against other financial responsibilities and accountabilities. Adani Mining is required to report its balance sheet to the Australian Securities and Investments Commission under Australian law, and our balance sheet has been publicly available for the past eight years for people to view,” it said.

With approvals for construction now in place, construction on the Carmichael mine and rail project is progressing well. The construction stage is due for completion approximately two years after approvals were received, and production of coal will shortly follow. The investment in the delivery of the Carmichael project was always expected to be a long-term investment, which is why Adani has remained committed to the project.

“Already Adani’s businesses in Australia have had major impacts on the Queensland economy, through its ownership and operation of Abbot Point Port Terminal, Adani Renewables’ solar farm in Rugby Run, and now with the delivery of the Carmichael project,” the group said.

Incumbency wave in India, Australia boosts stocks of Adani group

Shares in various Adani Group companies, including those of flagship Adani Enterprises Ltd, surged on Monday after exit polls predicted Indian Prime Minister Narendra Modi would return to power, even as Australian poll results also spelled good news for the Indian conglomerate.

Adani Enterprises rose as much as 29 per cent in afternoon trade, its sharpest intraday gain in over two years. Other Adani Group stocks such as Adani Power, Adani Gas and Adani Green Energy Ltd were all up more than 15 per cent in afternoon trading.

The rally in Adani stocks outshone a broader market rally, which saw the NSE index close 3.7 per cent higher at 11,828.25 points, while the benchmark BSE index was 3.8 per cent higher at 39,352.67 points.

The surge comes after exit polls on Sunday predicted that Modi may return to power with an even bigger majority in parliament, a far better showing than expected in recent weeks.

Billionaire Gautam Adani's rapid ascent to the top tier of Indian business is often associated with the rise of Modi, who is also from the western state of Gujarat.

Shares of Adani Enterprises have risen by about 170 per cent since Modi assumed power, compared to around 40 per cent under the previous Congress-led regime.

chart

Analysts say Adani Group's rally on Monday was in line with the euphoria in Indian markets, but did not specify why the group's stocks did so much better than the broader market.

"It is broadly an election-based rally. People are expecting reforms on the infrastructure side to continue," said an analyst covering Adani Ports, which rose more than 10 per cent.

Adani's empire, which includes billions of dollars worth of investments in mining, ports, trading, electricity and gas among other things, has benefited from Modi's emphasis on economic development. The business tycoon has in the past brushed off any notions that he has been granted undue favours.

Separately, news that Australia's conservative coalition has swept back to power with an outright majority also boded well for Adani Mining Australia, which has been struggling for years to kick off its ambitious Carmichael coal mine project in Queensland due to environmental concerns.

Adani Mining Australia used the election results to slam the labor government in the state, saying the poll verdict reflected public consensus on the mine.

"Let's hope they (Queensland state government) realise it is time to start listening to the people of Queensland," Lucas Dow, Chief Executive of Adani Mining, said in a statement