Adaniupdates, Author at Adani Updates

There’s always a silver lining!

Bihar, one of the oldest states of India, boasts a rich history that can be traced back to the formation of human civilization. But the caste survey released by the state government in October 2023 reveals a very dismal picture – poverty and a poor job scenario continue to ail the state. The government is mulling the introduction of a caste-based quota. Can it help solve this grave problem? Or should the government bring in more investments to alleviate the masses from their age-old struggles? Protests against alleged irregularities in government exams in the state often make headlines, reflecting the anger of the people and their helplessness about the lack of jobs in the state.

Underdevelopment has been pushing people to leave and relocate to more industrialised states. Migration for better education and jobs to other states and outside country is not a new phenomenon. If we look back at history, migration from the state began in the 19^th century and has continued ever since. Over half households in the state see migration to places that offer a better standard of living, better employment options and more money, states a study by the Institute of Population Sciences (IIPS).

One of the primary reasons for unemployment in Bihar is the lack of industrialisation and economic development. There are a few largescale industries and job opportunities, and the agricultural sector, which employs a significant portion of the population, has limited scope for growth, as per the Economic Survey of the state.

However, all is not doom and gloom. The economy of Bihar is largely service oriented, with a significant agricultural base. The state also has an industrial sector. Agriculture accounts for 35%, industry 9% and service 55% of the economy. There is virtually no manufacturing sector but its share is increasing.

The Adani Group’s increasing footprint in the state promises to create around 10,000 jobs, a significant number. The Group will make an additional investment of Rs 8,700 crore in sectors like cement, logistics and agriculture, said Mr Pranav Adani, Director, Adani Enterprises, at Bihar Business Connect-2023.

The conglomerate has invested ₹850 crore in Bihar in logistics and gas distribution and has created about 3,000 direct and indirect employment opportunities. With additional investment in multiple sectors, the Adani Group will create 10,000 direct and indirect employment opportunities in the state, which has a dismal unemployment rate – 17.5% in March 2023, the highest in the country. What makes this figure worrisome is that the state has had the highest unemployment rate for the last two years.

The Adani Group is mulling bringing Adani Wilmar to the state. The Ambuja Cements project is aiming for a 10 million metric tonne target and is expected to create about 3,000 jobs.

There’s always a silver lining. With initiatives like these, one can hope for the state to reclaim its lost glory.

There’s No Net Zero Without Green Hydrogen

Net zero is not possible without green hydrogen, which is the last mile for achieving the standard in every industry; it is also the last mile that the Adani Group is focusing on. The Group is making investments in green hydrogen and renewable energy sources to lower costs. That’s the Group’s strategy, that is what it wants to capture.

The Group’s formidable renewable capacity allows its constituent businesses to progressively source renewable power to lower Scope 2 emissions. Each business is looking at ways to work with upstream and downstream stakeholders to mitigate Scope 3 emissions. However, it is also the case that for many sectors, green hydrogen will be critical for decarbonisation.

The Group has demonstrated significant progress in its decarbonization pathway and its ambition to support the global net zero journey. It has set a target to become net zero by 2050 or earlier for five of its portfolio companies — Adani Green Energy, Adani Energy Solutions, Adani Ports & SEZ, ACC and Ambuja Cements. The Portfolio businesses are actively sourcing renewables, electrifying operations and adopting biofuels, and deploying waste heat recovery and energy storage technologies. The portfolio companies will be investing $100 billion over the next decade towards achieving energy transition.

Besides planting 100 million trees by 2030, the group’s focus is on ESG innovations.

To promote reduced emission and sustainable energy, Adani Power has partnered with Japan’s IHI Corporation and Kowa company to explore ammonia co-firing at the Adani Power Mundra plant. The company initiated a green ammonia combustion pilot project at its Mundra plant as part of its decarbonization efforts. The project aims to co-fire up to 20% green ammonia in the boiler of a conventional coal-fired 330 MW unit at the Plant. Initially, it aims at de-carbonizing Adani’s coal fired plants but with a larger objective to implement the technology in other coal-fired plants across India.

In another significant move, Adani Enterprises Limited (AEL) has entered into an agreement with Ashok Leyland and Ballard Power to develop a hydrogen Fuel Cell Electric Truck (FCET) for mining logistics and transportation; this will make AEL Asia’s first and one of the few companies globally to operate green hydrogen-powered mining trucks. The launch of the FCET in India is scheduled for 2024, marking a significant milestone in advancing a hydrogen economy and positioning India at the forefront of the emerging technology.
The last mile in the net zero transition of airports requires the decarbonisation of aviation fuel for which e-kerosene produced, using green hydrogen, is the most viable prospect. For the ports and shipping business, green ammonia produced from green hydrogen provides the most likely path to net zero. While electrification and battery electric vehicles will play an important role in decarbonisation of transport, fuel cells operating on green hydrogen will be critical for heavy duty trucking and mining operations.
Adani Total Gas Limited (ATGL) has announced the launch of its green hydrogen blending project in Ahmedabad. The objective is to assess the viability of green hydrogen as an alternative energy source for the city gas distribution consumers. The pilot project will involve blending green hydrogen with natural gas for at least 4,000 home and commercial PNG customers in the city.
Scaling of India’s infrastructure will require a multiple fold increase in cement production – a carbon-intensive business. Carbon capture and storage, especially in concrete, will play an important role; however, in the absence of significant known sequestration reserves in India, the utilisation of carbon with green hydrogen to produce polymers for building materials could be another possible decarbonisation pathway.

The chess board and game concept of business ideas and competition.

Against All Odds

As 2023 draws to an end, it’s time to reflect on the highlights of the year. For the Adani Group, the year started on a positive note. Never had the Group been so confident about its strength and growing prominence. The richest Indian, Asian and the third richest man in the world, Adani Group Chairman Gautam Adani was all set to launch the Adani Enterprises Ltd’s (AEL) follow-on public offer (FPO) on January 27. The much-awaited FPO was to the tune of ₹20,000 crore that could influence the AEL stock on markets and propel the Group even higher on the growth list.

However, it was not meant to be. Just days before the launch, U.S. short-seller Hindenburg Research came out with a report, intending to bring down the Rs 2.62 lakh crore conglomerate and earn profits through its short position. It came as a big setback to Mr Adani and his empire.

The Hindenburg report accused the Adani Group of stock manipulation and regulatory failure. In a matter of few weeks, Adani lost over $100 billion. Conspiracy theories began to proliferate. These were discussed and debated by activists and journalists, making news headlines.

The man, who rose from being a diamond sorter to becoming one of the richest men in the world, has faced his share of challenges and attacks on multiple fronts – his alleged close relations with Prime Minister Narendra Modi, mining operations, power projects and alleged violation of SEZ norms in Mundra. Each time he rose stronger and determined to keep building and expanding his business group and contribute to nation-building. The infrastructure behemoth is built on a very solid foundation.

The FPO was called off. Within days, the billionaire’s wealth nosedived by over 60%. But Mr Adani is a man of mettle, never cowed down by hurdles and hardships. He did not waste time and started to consolidate by repaying debts; it was a smart decision to win back the confidence of retail investors. In the months following the attack, the Group took several measures to regain the trust of banks and global investors. Be it GQG Partners or IHC, Dubai, all reposed their trust in him and backed several Group businesses.

Even as the Group was trying to stabilize the situation, petitions were filed in the Supreme Court (SC) on the loss of investor wealth in the stock market due to the steep fall in Adani stocks. The SC formed a committee to probe the matter and directed the Securities and Exchange Board of India (SEBI) to investigate if there was a regulatory failure on part of the Group.

The months following that report witnessed a sort of courtroom drama unfolding before the public, ending in a clean chit given to the group by the SC panel. In its May report, the panel gave the Adani Group a clean chit. It stated that the conglomerate took the required actions to reassure individual investors following the release of the Hindenburg report and there was no regulatory failure on the part of SEBI and no pricing manipulation on the part of the Adani Group.

However, this did not go down well with some like Prashant Bhushan, who questioned the veracity of the panel’s decision. He also questioned SEBI’s role and that of the panel members.

Bhushan, known for his propensity to file public interest litigations (PILs), found himself in a tight spot after accusing several members of the SC panel of conflict of interest. “Be careful as we are not giving any character certificates. We can’t make random allegations,” Chief Justice of India (CJI) D.Y. Chandrachud said while taking exception to the allegations made by the senior lawyer against the expert panel formed by the SC to find out if there were irregularities on the part of the Adani Group in its dealings.

The CJI slammed the lawyer, who petitioned the court for a probe into the allegations made by U.S. short-seller against the Adani Group and by the Organised Crime and Corruption Reporting Project (OCCRP). He also sought action against SEBI for missing its deadline for a report in the Hindenburg case.

Bhushan levelled specific accusations against Somasekhar Sundaresan, claiming that in 2006, the lawyer had represented Adani against SEBI. “Let’s be reasonable,” the CJI responded. “He was just playing the part of a lawyer. You’re saying that he worked for Adani in 2006. How can an incident that happened 17 years ago create a conflict of interest? There has to be some responsibility about the allegations you make.”

The CJI said SEBI did not select the members of the SC expert committee. “It’s unfair to the committee because if this continues, people will not want to work in SC committees,” he observed. On November 23, Sundaresan was named a judge of the Bombay High Court.

What went against the holier-than-thou PIL man was his conflict-of-interest allegations. They backfired when Solicitor General Tushar Mehta, appearing for SEBI, told the court that the OCCRP report that Bhushan cited in his plea was sent by him to OCCRP. “When we approached OCCRP for the report, they told us to get it from Bhushan,” Mehta told the court, stating that Bhushan got the report made and then appeared in the same case. Mehta said he did not disclose it earlier as it would have embarrassed Bhushan.

The SG told the court that the OCCRP directed them to an NGO linked to Bhushan. This, the SG termed, was a conflict of interest because “if we start looking into such self-serving reports, our regulation will become meaningless”.

The OCCRP is a non-profit organisation comprising a global network of investigative journalists that has funding from the likes of the United States Agency for International Development (USAID), Rockefeller Brothers Fund, the Ford Foundation, the International Center for Journalists (ICFJ), the United States Department of State, Swiss Confederation, Google Ideas, Open Society Foundations (OSF) and the Knight Foundation.

CJI Chandrachud cautioned the attorneys to exercise responsibility and limit their requests for reasonable relief in similar circumstances to those in which they have proof. “You lawyers should be responsible with what you’re asking for,” he said. “This isn’t your typical classroom argument. Without a single piece of proof, you are requesting that the Supreme Court launch an investigation into SEBI and LIC? Are you aware of the repercussions?”

“SEBI cannot be allowed to look into something based just on media reports,” the CJI told the lawyers. He pointed out that there was no evidence in the file to cast doubt on the validity of SEBI’s probe. Dismissing Bhushan’s claim that SEBI did not take any action in response to news that implicated Adani, he said media stories were not subject to the same scrutiny as SEBI’s investigations. The apex court then reserved its judgement in the case.

The Art of Giving Back

It is as much about the people who contribute to social change as the people who are willing to encourage it. Somebody aptly described it: “Just as every push requires a pull, every pull requires a push”. And when push and pull are combined and pointed in the same direction, magic is created.

Every contribution to community service, be it on an individual or group level, is important. Businesses can make a large impact and should contribute to bringing about transformation – a great way of giving back to the community. After all, communities play an integral part in the growth of businesses. This kind of involvement can influence everything. Such efforts, no matter how big or small, have a good impact. Businesses that participate in charitable endeavours might gain immediate or long-term advantages that are often tangible.

Creating an environment where you believe that giving back is important need not require a reason. It could be because it makes you and everyone around you feel good. Or it could be because it is crucial and might save a life.

In the pursuit of this purpose, the Adani Group launched Green Talks, a fresh approach to helping solve social problems, in 2021. Chairman Gautam Adani believes that as a society, we must agree on a baseline quality of life, on giving all people fair access to good primary education, good primary healthcare and the opportunities to fulfill their economic aspirations. Innovation and enterprise can help people if directed at them and at making specific contributions to help them improve their lives.

Giving back is the right thing to do and we should encourage social enterprises as they focus on improving the lives of the less privileged, focus their energies and abilities on serving society. Communities that have been traditionally deprived don’t need handouts and lofty promises; what they want, and need, are resources to boost their skills, capacities and abilities to make new livelihoods and adapt old livelihoods to new demands.

Green Talks is an annual event that honours five social entrepreneurs working to address social issues. In today’s fast-changing world where survival is under constant threat, the only way to survive is by innovating, and Green Talks is one such innovation. It finds mission-driven businesses and helps them grow, allows them to eventually reach out to more people and make a positive, long-lasting impact.

While launching the inaugural Green Talks, Mr Adani said, “We must invest heavily in enabling the transition to a greener, low carbon world. The transition must also include plans to enable the social upliftment of people. The green shoots of recovery for the planet can be truly green only if we create a climate of faith and optimism for even the world’s most socially deprived people.”

A leader needs to be obstinate and transformational. A leader also needs to have a big heart. There are incidents where people have approached Mr Adani for help and never returned empty-handed. Some years ago, he visited a hospital where 20 patients were waiting for organ transplantations due to lack of money. When Pratap Reddy of Apollo Hospitals mentioned it to him, he immediately wrote a cheque for the said amount and gave it to him. He is a unique personality. He provided help to an employee’s blind daughter, who sang beautifully. Nothing escapes his attention. The mark of his attention to detail is evident everywhere – people, ports, buildings. He never cuts corners.

He was named in the 16^th edition of Forbes Asia’s Heroes of Philanthropy list last year and in the EdelGive Hurun India Philanthropy List 2023.

AEL: A Successful Incubation Story

Incubators are more than just a buzzword. They play a significant role in a startup’s rise to success. They are a kind of launchpad for startups and enterprises in their early stages, offering them resources they need to develop and expand.

The Adani Group’s incubation continues to be a success story with airports, green hydrogen and other assets emerging strongly and now contributing near 8% of the portfolio EBITDA, said Jugeshinder (Robbie) Singh, Group CFO, while releasing the Adani Portfolio’s half yearly financial performance update. He said the Portfolio had withstood the test of time and had a track record of tremendous growth despite macroeconomic and other challenges.

The Group’s business model is unique. The organization keeps building one business after another and expanding – this is called adjacencies of the business models. AEL is considered the largest listed business incubator of India with a focus on four core sectors: energy and utility, transportation and logistics, consumer goods, and primary industry. These businesses are a balanced combination of well-established ventures and emerging enterprises, all dedicated to meeting the evolving needs of India.

Within the Adani portfolio, AEL has a track record of establishing new business ventures, growing them into substantial, self-sufficient entities, and then spinning them off into separately listed, scalable companies. Since its inception in 1993, AEL has proven its ability to create sustainable infrastructure enterprises by continuously generating value for shareholders by using this strategic approach.

Incubators help businesses get their ideas off the ground and give them a leg up. In its report, Jefferies Equity Research said AEL had incubated six industry leading infra businesses and listed them, including by way of demergers. Over the years, the group has also demonstrated that it is ready to forge necessary strategic alliances (for example, with CMA-CGM, TotalEnergies, EdgeConnex and Wilmar) to support business growth. Over a 25-year period, these ventures have given stockholders significant returns.

The report said that investments in airports, green hydrogen, data centers and roads are likely to be ramped up over next decade and they are expected to be next growth driver for business. AEL classifies its current portfolio into established businesses (like IRM coal trading, mining services and solar manufacturing) and developing businesses, which include airports, roads, new industries (green hydrogen). There are several businesses (such as copper, PVC, water infrastructure, defence and aerospace) that are still in the early stages of development and aren’t contributing to revenues/profitability currently. With a new set of businesses, the company is also extending its focus to B2C businesses through airports, digital (super app) and FMCG.

Using financial flows from established businesses, AEL’s business model focuses on growing emerging or next generation businesses.