February 4, 2023
Embattled business tycoon Gautam Adani (left), who is close friends to Indian Prime Minister, Narendra Modi
By Dr Ahmed Mohiuddin Siddiqui
India’s dubious industrialist Gautam Adani, who was the third richest billionare in the world until last week, has come down to number 11 on the richest list after the Hindenburg Research came out with a damning report exposing Adani’s alleged ‘largest con conglomerate’ in business history.
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Gautam Adani has his feet firmly placed on the African continent with billions of dollars in investments.
It may be recalled that the Abu Dhabi-based ports and logistics giant AD Ports Group and India’s largest private ports and logistics company, Adani Ports and Special Economic Zone (APSEZ) signed a memorandum of understanding for strategic joint investments in Tanzania in August 2022.
Within six months of this deal, Gautam Adani’s falling fortune reads like the blood pressure (BP) reading of a dying man with the economic graph falling like the mercury on the BP apparatus.
The agreement in Tanzania was supposed to see investments in end-to-end logistics infrastructure and solutions such as rail, maritime services, port operations, digital services, an industrial zone and the establishment of maritime academies in the developing East African country. But, it may now be only a matter of time before this hangs in balance.
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Gautam Adani’s debt driven expansion has come under severe scrutiny. The ambitious Indian business group, targeted by short seller allegations, has doubled borrowing to US$30 billion in the past 4 years.
Adani Enterprises had a net debt-to-ebitda ratio of 10 times as of the financial year ended March 2022, according to calculations by Fitch company CreditSights — one of the highest in the conglomerate.
For the unversed, the Debt to EBITDA is a debt ratio that measures a company’s ability to pay off its debt. The debt to EBITDA ratio is calculated by dividing a company’s total debt by its EBITDA.
This ratio is used by lenders to determine a company’s risk level and by investors to determine a company’s ability to pay dividends. It measures a company’s debt relative to its earnings before interest, taxes, depreciation, and amortization.
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But the Adani Group requires further spending to meet its targets, with plans to more than double annual capital expenditure to US$4.88 billion, both this year and next.
Meanwhile, Adani has cancelled an FPO for generating more funds after the freefall of his group’s shares in the stock market.
A keen observer of Adani’s business dealings – Shantanu Basu asks: “Have you seen the list of subscribers to the FPO? If not, there are unheard of funds that have subscribed by the dozens. None of them may have any presence on the Web or the internet.”
Shantanu claims that “it is abundandantly clear that these were fronts of Adani Group, laundering proceeds of crime, via this FPO. Once subscriptions were full and news started leaking out of such dubious deals, AG cancelled the FPO.
“Now, all his entities no longer have black money, it is all sparkling white. They may have been no more than a ruse to launder the Bharatiya Janata Party (BJP) funds.”
It is not just the Adani Group but the ruling BJP in India is also getting entangled in the controversy as Gautam Adani and the Indian Prime Minister Narendra Modi are close friends.
The Indian Parliament was adjourned on Thursday after the opposition parties demanded a discussion on the Adani ‘Con’ issue after the state-owned State Bank of India and the Life Insurance Corporation (LIC) incurred notional loss of billions of dollars — impacting the poor people of India.
The billion-dollar question is: ‘Will Tanzania also be impacted due to Adani’s ‘economic misdoings?’
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