The Rise and Fall of Adani

The rise of Gautam Adani has been spectacular, and his transformation from provincial businessman into history-making industrialist is now almost a national myth. Adani was born in the state of Gujarat, on India’s west coast, a region renowned for its long coastline and high levels of industrialisation. He was not born to great wealth, but from a young age he sought to acquire it. In the early 1980s, he quit his college studies and moved to Mumbai to dabble in diamond trading. He didn’t find his fortune with the gems, instead moving back home to work in the family business, producing cling wrap.

It may seem inauspicious, but Adani had found the germ for his future empire: polyvinyl chloride, or PVC. Astutely, Adani bought up local import licences for the product and began importing in high volume. He found a profitable surplus from doing so, and parlayed this into the importation of other industrial chemicals. His business grew rapidly, before he diversified again in 1995 by constructing a port in Mundra. His wealth and assets would snowball, but dogging his rise were serial allegations of cronyism, tax evasion, environmental degradation and the displacement of Indigenous people. Adani would also develop a reputation for his aggressive litigation of critics, notably journalists.

If Adani’s rise through the 1990s and 2000s was impressive, it became startling after the ascension of Narendra Modi to the prime ministership in 2014. Modi had previously been chief minister of Adani’s home state of Gujarat, where the businessman had assiduously courted the nation’s future leader. Together, they wrote a narrative of unstoppable Indian growth and positioned themselves as fundamental to it. An attack on Adani was spoken of as an attack upon India.

“There’s a notorious photograph of Mr Modi boarding an Adani plane, with their logo emblazoned across it, which followed Mr Modi’s successful election in 2014,” says Geoff Law, the editor of Adani Watch, an online publication that the Bob Brown Foundation established in 2019, and which describes its mission as covering financial, environmental and social justice issues related to the company. “That photograph sums up the relationship. The skyrocketing of Mr Adani’s wealth, and the fortune of the Adani Group, has virtually all occurred following Mr Modi’s ascension to prime ministership.”

In 2014, Gautam Adani’s net worth was about $US2.8 billion. Earlier this year, it was estimated at $126 billion, and Forbes magazine listed him as the world’s third-wealthiest man. The company has also established the controversial Carmichael coalmine in central Queensland and built a 200-kilometre rail line to Abbot Point port – recently renamed as the North Queensland Export Terminal – which it also owns. After almost a decade of protests, advertising campaigns and fractious applications, the mine, in a much smaller capacity than the one initially proposed, began its first shipments of coal in late 2021.

It is not difficult to state the influence and control of the Adani Group in Indian public life.

From that early investment in PVC, Adani today runs mining, power generation and transmission, ports, airports, food production and, with its recent majority stake in NDTV. The broadcast media network was considered one of the last independent outlets in a country that resides towards the bottom of Transparency International’s global rankings, and its founders quit the board in protest. Several journalists have since followed. “Some people see adani as a great entrepreneur,” “Others perceive him as an oligarch.”

the former view dominates coverage. “A lot of media reporting on Adani over the last two or three years has been puff pieces about his business ability,” .“Much of the reporting has had a certain breathlessness to it.”

Hindenburg Research is a curious financial analysis firm. Based in Manhattan and founded by investor Nate Anderson, it is named for the 1937 zeppelin disaster, which Anderson says was the “epitome of a totally man-made, totally avoidable disaster”. The firm takes a special interest in companies that may feature irregularities, excessive debt or corrupt practices. It then makes public its forensic reports, and seeks to profit from the companies’ subsequent decline in share value – something the firm declares openly.

On January 24, Hindenburg Research published a 32,000-word report on Adani Group, the work of two years’ research and analysis. Bluntly titled “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con in Corporate History”, the report alleged that Adani family members had been conducting a massive shell game of creative financing via a network of offshore entities in tax havens. The report also implicated Adani Group’s mining operations in central Queensland.

It has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades,” the report reads. “Adani Group’s obvious accounting irregularities and sketchy dealings seem to be enabled by virtually non-existent financial controls.”

The effect was immediate and dramatic – the markets moved, entities divested, and Adani Group’s share value almost halved, a loss of about $74 billion. It became a global story, while Modi’s closeness with Gautam Adani was fiercely debated in the Indian parliament.

Adani Group’s response was bullish and very long – more than 400 pages. It emphatically denied any wrongdoing: “This [report] is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short-seller, to book massive financial gain through wrongful means at the cost of countless investors.”

Bravus, Adani’s Australian arm, which operates the Carmichael mine, added: “The Hindenburg Report presents transactions related to Adani’s Australian businesses in a misleading way to purposefully undermine the reputation of the Adani Group, in order to pursue their own profit by short-selling shares in Adani Group companies. All our businesses are Australian companies that comply with Australian corporations and securities legislation.”

Bob Brown, the former federal Greens leader, who led a convoy of protesters against the mine in 2019, told The Saturday Paper the report speaks for itself. “The markets don’t react like that to hollow or unsubstantiated reports,” he said. “Third-richest person on the planet, and he’s done that through extraordinary political contacts and a remarkable use of the courts to suppress criticism.”

Tim Buckley once worked as a senior equity analyst for Citigroup and Deutsche Bank – two of the world’s largest investment banks – before a spasm of disgust altered his career, prompting him to found Climate Energy Finance in 2022, a public interest think tank concerned with encouraging renewable energy. He has been a thorn in Adani’s side for years now. “What Hindenburg alleges is a $200 billion company expansively manipulating investors for over a decade,” he says. “It’s the largest con in world history, if what Hindenburg says is correct. I’ve spent a lot of time looking at the Wirecard fraud in Germany. That was a financial services operator, worth about $24 billion, so much smaller than Adani, and in that case the auditors were asleep at the wheel, and politicians and regulators endorsed their business model, and that’s precisely what Hindenburg is alleging here.

The fact that Hindenburg could lose money if its report was wrong or rebutted easily, was actually the biggest signal of its credibility.

Hindenburg Report Impact: MSCI to Cut Weighting of 4 Adani Companies


The companies within the Adani Group witnessed a significant fall in stock prices after an announcement by the MSCI that they would be reducing the amount of freely tradable shares in their calculation and cutting the weighting of the four companies in the Group in its indexes.

MSCI or Morgan Stanley Capital International is an investment research firm that provides stock indexes, portfolio risk, and performance analytics, and governance tools to institutional investors and hedge funds.

The decision by the MSCI comes in the wake of the report by Hindenburg Research, which has accused the conglomerate of improper use of offshore tax havens and stock manipulation. The Adani Group, in a long response, had denied any wrongdoing.

However, in the aftermath of the report, close to $110 billion have been wiped off the value of the group's main seven listed firms, according to Economic Times. The crisis seems to have worsened with the MSCI announcement. The changes it has announced are expected to be put into effect by the end of this month.

According to Money Control, the MSCI announcement has led to a fall of 8% for Adani Enterprises, 6.4% for Adani Total Gas, 5% each for Adani Transmission and Adani Power, 3% for Adani Wilmar, and 3%, 2%, 2.6%, and 0.3% for Adani Green Energy, ACC, NDTV, and Ambuja Cement.

The website cited a note by Nuvama Wealth Management and said that the weighting of Adani Enterprises will decrease by 30 basis points to 0.5% in the MSCI Global Standard Index. The note also stated that the weightings of the other three stocks will also decline, which could result in “around $500 million combined outflows from these stocks”.

French company TotalEnergies on Wednesday said that it has put on hold its participation in the Adani Group’s $50 billion (over Rs 4.12 lakh crore) hydrogen project after allegations of financial irregularities were raised against the conglomerate by United States-based firm Hindenburg Research, Reuters reported.
The partnership with Adani Group’s hydrogen venture was announced in June and TotalEnergies was slated to take a 25% stake in the project, according to The Economic Times. TotalEnergies is one of the biggest foreign investors in the Adani Group.

So far there has been no statement either from the government of India or the market regulator SEBI about the allegations regarding corporate governance issues in the group. 
Congress party holds nationwide protest

India's main opposition parties kicked off planned protests at state-run companies such as LIC and SBI which had invested a considerable amount in the Adani Group. 

The Congress party held nationwide protests over the Adani-Hindenburg row. Dozens of members of the main opposition party in India were detained by police during protests. Besides that, the parliament was also suspended again due to disruptions.  

However, the Adani Group in a strong rebuttal on January 26, dismissed all allegations and instead described the U.S.-based short-seller’s report as a “calculated attack on India” and its “judiciary and regulatory framework”. 

Meanwhile, according to the Bloomberg Billionaires Index, Gautam Adani, who was ranked third in the world’s richest billionaire list, has now dropped to 15th position.