Adani rise fuels criticism of concentration of capital in few hands: Report

 Gautam Adanis mushrooming empire has become a focus of criticism for those who believe that capital is being concentrated in the hands of a few favoured corporate titans at the expense of Indias middle class, Financial Times reported.

The report said some argue the concentration of economic power in family-run conglomerates is a way to fast-track India's economic development, like the Chaebol did for postwar South Korea. But critics say the rapid consolidation of state assets is creating monopolies and stifling competition.

The report said whether India's industrialisation leaves it more closely resembling the US at the turn of the 20th century when the likes of oil magnate John D. Rockefeller wielded vast influence, or Russia in the 1990s, Adani's voracious appetite for dealmaking and political instincts have ensured he will play a central role.

"Gautam Adani is very powerful, very politically well connected and very astute at using that power," says Tim Buckley, an energy analyst based in Australia who tracks India. The Adani Group declined to comment for this article, FT said.

The Adani Group's total outstanding debt came to more than $30 billion as of November 11, according to data from Dealogic, including $7.8 billion worth of bonds and $22.3 billion in loans. High debt is nothing new among Indian conglomerates but the Adani Group's rapid expansion has raised concern.

Credit Suisse warned in a 2015 "House of Debt" report that the Adani Group was one of 10 conglomerates under "severe stress" that accounted for 12 per cent of banking sector loans. Yet the Adani Group has been able to keep raising funds, in part by borrowing from overseas lenders and pivoting to green energy.

The report said Adani continues to enjoy ample access to capital, both at home and overseas, and can tell investors that he has never defaulted on a loan despite highly leveraged balance sheets. Adani Group companies tapped international debt markets with bond sales of more than $2 billion and Adani Gas sold a 37.4 per cent stake to Total for a reported $600m, which gave him ample cash flow to weather the shock of the pandemic when it hit. And international groups are queueing up to partner with the mogul. Earlier this month, Adani announced a strategic collaboration in hydrogen and biogas with Italian gas and infrastructure group Snam.

But for others, Adani has become too big to fail. "He's become one of the most powerful men in India in the space of 20 years," Buckley says. "What he touches turns to gold," the report said.

We will be India's largest renewable energy player in 2020: Adani Group

Gautam Adani, chairman of Adani Group, announced the company will become India’s largest renewable energy company in the current year and one of the top three global solar companies by next year. In a blog post on social media platform LinkedIn, Adani declared the group will invest 70 per cent of the capital expenditure in clean energy and energy efficient systems.

Adani in his post said they aim to become world’s largest solar power company by 2025 and the world’s largest renewable power company by 2030. “We feel confident that we will be able to lead one of the fastest global carbon offsets,” he said.

The announcement comes in wake of investors and infrastructure companies committing allegiance to clean energy and reducing exposure to fossil fuel dependent industries. The world’s largest asset manager BlackRock announced last week, it will pull out its investments in companies that get 25 per cent of their revenues from thermal coal production, besides making no future direct investment in such firms. Business Standard reported this could have adverse impact on Indian companies such as NTPC, the Adani group and Coal India (CIL).

BlackRock has investment of $26 million, $19 million and $600,000 in Adani Transmission, Adani Ports & SEZ and Adani Green Energy, respectively.

Similarly, Siemens which is providing signalling system to Adani’s Carmichael coal mine and rail project in Australia, has also indicated increasing footprint in environmentally conscious businesses. Siemens’ announcement came after teenage environment activist Greta Thurnberg asked the company to cancel its investment in Adani's coal project in Australia.

The Adani group is constructing one of the world’s largest coal mining and rail connectivity project in Australia. It involves the construction of a thermal coal mine in the North Galilee Basin and a 388 km multi-user rail line linking the mine site with Abbot Point Port. This will be the first mine in the Galilee Basin, to be developed at a cost of more than $16 billion.

The project has faced protest from across the global environment lobby. With recent devastating fires in the states of New South Wales and Victoria in Australia, many environment groups are questioning the project, again.

Siemens CEO Joe Kaesar, however, has defended the Carmichael project saying it has been approved under necessary environment protection laws. He also added, “There is practically no legal and economically responsible way to unwind the contract without neglecting fiduciary duties. However, given the importance of legitimate environmental concerns, we have secured the right to pull out of the contract if our customer violates the very stringent environmental obligations.”

Adani currently operates 12 coal and metal mines in India, as a private mining development operator. It also has operational thermal power capacity of 10,440 MW and 8,760 MW of upcoming thermal power plants in India alongwith a solar power capacity of 1,198 MW and wind power capacity of 347 MW.

Adani in his post said the renewable generation capacity of the group is expected to more than double by 2020, with the implementation of 2.9 GW under construction capacity and further three-fold growth touching 18 GW by 2025. “To make this happen, we have committed to investing over 70 per cent of our budgeted Capex of the energy vertical into clean energy and energy-efficient systems,” he said.

He said the green expansion plan will also include expansion of the current 1.3 GW solar cell and module manufacturing plant in Mundra to 3.5 GW manufacturing facility. “We are also in discussions on ventures to enable the world’s only 100 per cent green energy-based chemical manufacturing and data center facilities,” Adani said.

We aim to become world's largest solar power player by 2025: Gautam Adani

Billionaire Gautam Adani on Wednesday said his group is aiming to become the world's largest solar power company by 2025 and the biggest renewable energy firm? by 2030.

In a Linkedin post, the Adani Group chairman said the age of renewable energy has dawned upon the world faster than most could have anticipated.

"Our vision is to become the world's largest solar power company by 2025 and the largest renewable power company by 2030," he wrote.

In 2019, the Adani Group was ranked as the sixth largest solar player globally and as a part of this journey, "we are well within reach to be India's largest renewable energy company by 2020 and one of the top three global solar energy companies by 2021."

"Our existing portfolio of renewable power generating assets stands today at over 2.5 GW. This is expected to more than double by 2020, with the implementation of 2.9 GW under construction capacity and further record three-fold growth touching 18 GW by 2025. To make this happen we have committed to investing over 70 per cent of our budgeted capex of the energy vertical into clean energy and energy-efficient systems," he said.

Doubling down on controversial Australian mine, Adani says it is viable

The Indian billionaire behind the controversial Carmichael coal mine in Australia is hitting back at criticism the endeavor will be both unprofitable and too dirty.

In an interview in New Delhi, Gautam Adani took aim at two major faults opponents have flung at the development: that the mine’s low-quality coal won’t earn enough money to justify his $2 billion investment, and that the world must abandon the fuel in favor of renewable energy to avoid catastrophic climate change.

“If the project wasn’t viable, we wouldn’t have pursued it,” said Adani, whose net worth of $9.8 billion makes him India’s sixth-richest person, according to the Bloomberg Billionaires Index. “Renewable energy is good for the nation, but it can’t meet our baseload power needs.”

Adani bought the resource in Australia’s Galilee Basin in 2010 as Indian companies rushed for overseas energy supplies amid forecasts of booming demand. But as coal prices fizzled through the first half of the decade, Carmichael’s output -- closer to lower-quality Indonesian coal than the high-value varieties Australia is known for -- is seen unable to fetch a price strong enough to be profitable.

“The commerciality of Adani’s Carmichael mine remains challenging given the significant capital spend and low-quality thermal coal product expected from the mine,” said Brent Spalding, a principal analyst at Wood Mackenzie Ltd.

Climate Warnings

Australia’s Newcastle coal, a benchmark in Asia, would need to rise above $100 a metric ton, from about $78 now, for Carmichael to break even, according to Spalding.

Carmichael, which cleared final state approvals last month, will open up a new mining basin in the Australian outback amid increasingly dire warnings of the need to cut carbon emissions to avoid the ecological and economic havoc of climate change. Though coal is the most carbon-intensive fossil fuel, Adani has found a relatively friendly host country in Australia, where the economic heft of the resource industry helped re-elect a pro-coal federal government and overcome staunch opposition from environmentalists.

“We entered Australia with two overarching goals; contributing to energy security in India and creating job opportunities for the locals,” said Adani, 57, who started as a diamond trader in Mumbai before setting up Adani Group in 1988. His conglomerate -- spanning ports, energy and mining -- has become one of India’s key infrastructure service providers, while also venturing overseas.

Surplus Generation

Coal’s use has been on the decline in Europe and the U.S. amid cheaper alternatives and pressure to ditch the most-polluting fossil fuel. Yet it dominates power production in much of Asia, a position it’s expected to sustain despite a boom in cleaner sources, such as wind and solar, as energy demand continues to grow.

Adani said the board approved 10 million metric tons of annual output from Carmichael’s first phase, which will head to his power plants in India, including Mundra and Godda. Adani Group is headquartered in Gujarat the state where current Prime Minister Narendra Modi served as the chief minister for little over a decade before he swept national elections in 2014.

India’s per-capita consumption of electricity “is way below the global average,” Adani said. “India’s development is linked to the availability of more power. And coal will play a big role in this as a baseload supplier.”

India’s challenges supplying reliable power to every home have been more about distribution than whether it has enough power plants or coal. The nation already has a surplus of generation capacity, but it’s money-losing, debt-saddled state utilities struggle to purchase and distribute enough power, leaving some power stations shuttered and homes in the dark.

When the company decides to raise the capacity of Carmichael -- peak annual capacity is now seen at 27 million tons, down from an original 60 million -- it will explore selling washed coal to buyers in Japan and Korea, according to Adani. Construction has already begun, he said, reiterating the company’s two-year timeline for first output.

“The need of the hour,” Adani said, “is to get started.”