An import-duty on solar equipment that the Indian government imposed following lobbying led by the Adani Group has been a public-policy disaster. The policy was designed to protect India’s domestic manufacturing of solar panels. But it has failed in that objective and slowed down India’s transition to renewable energy. A duty-evasion scheme has allegedly defrauded the government of at least $228 million. The price of solar power in India has increased. More coal is being burned. And associated court rulings may cost Adani Green over US $100 million.

In recent weeks, the Adani Group’s renewable-energy generation business, Adani Green Energy Limited, has been on a PR blitz.

Group chairman Gautam Adani was in London on 26 March 2024, launching the ‘Adani Green Energy Gallery’ at the city’s historic Science Museum. On 28 March, Israeli social media personality Nuseir Yassin, who is one of the world’s most recognizable influencers with his ‘Nas Daily’ channel boasting a combined global audience of over 65 million across various social media platforms, published a video collaboration with Adani Green, excitedly extolling the contributions of the Adani Group to India’s ‘Green Energy Revolution’, with footage shot at the Science Museum gallery and at an Adani-run solar-power project in India that Yassin claims can be seen from outer space.

This comes shortly on the heels of a successful bond issue by the company, in which it raised US $409 million to pay off a previous set of bonds. This was the first time the Adani Group had approached the bond market since its value crashed following the January 2023 release of the explosive Hindenburg report, which alleged widespread financial malpractice in the Group.

Away from the headlines, however, the Adani Group’s renewable energy businesses may be facing a considerable revenue risk arising out of a 2023 verdict by an electricity regulator in the Southern Indian state of Andhra Pradesh that denied it a hike in the power tariffs it charges for electricity it generates at one of its solar plants. The Andhra Pradesh verdict constitutes a precedent for a series of similar cases involving several other Adani solar projects demanding higher tariffs that are pending before electricity regulators and India’s Supreme Court. Hearings at the Appellate Tribunal for Electricity (APTEL) of Adani’s appeal of the Andhra Pradesh ruling were concluded on 11 March, the judgment has been “reserved”, and is imminent. The cumulative revenue impact of all the cases together, if they go against Adani Green, could amount to over US $100 million.

Ironically, the possible losses are a fallout of a policy change brought about by the Adani Group’s own prior lobbying. An industry body of India’s top solar equipment manufacturers, led by Adani Solar, a subsidiary of Adani Enterprises, lobbied the Indian government in 2017 to protect the domestic industry from lower-priced imports. This led to the government instituting an import duty on solar modules manufactured in China and Malaysia in order to promote manufacturing of the modules in India. The import duties were imposed for two years in 2018, and were renewed, at a reduced level, in 2020 for a further year, and reintroduced under a different name in 2022. These duties increased costs for Indian solar-power generators, including Adani Green, which sought to offset the increased costs by increasing electricity tariffs. The tariff increases have to be approved by electricity regulators, and the Andhra Pradesh regulator’s verdict and reasoning denying such a tariff increase may form the grounds for all such tariff increases to be rejected, including some that have already been approved but are now being reconsidered in appeals.

Beyond its potential adverse revenue impact on Adani Green’s bottom-line, however, the policy that the Adani Group had lobbied for was a misstep that slowed down India’s energy transition, as experts had warned at the time. This measure has had a series of deleterious consequences.

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The Adani Group’s listed companies lost over US $15 billion in value during a wider market correction on 13 March 2024 amid warnings from India’s market regulator about ‘froth’ in the stock market. Despite a partial recovery, they once again lost about US $8.5 billion on 18 and 19 March. The Group’s stocks and bonds have all been consistently down over the past month, raising the possibility of a group-wide correction underway. While there have been long-standing concerns regarding the Adani Group’s listed firms being over-valued, in this report AdaniWatch analyses coverage of Adani Group shares by analysts and investment in its shares by mutual funds to quantify how little Indian market professionals trust the Adani group’s listed companies’ valuations. This analysis calculates that Adani stocks are overvalued by at least 32%.

The explosive report by US-based short-selling firm Hindenburg Research of January 2023 held that the Adani Group’s shares were over-valued on the Indian stock exchanges by 85%. This over-valuation, that report said, was attributable to alleged manipulation of the Group’s share prices. The report alleged that the Adani Group was funnelling money into its own shares through shell companies disguised as independent foreign-portfolio investors and artificially pushing up its share prices to levels far above those justified by the underlying fundamentals of its businesses.

On 13 March 2024, a downward trend started in Indian stock markets. Since that day the Bombay Stock Exchange’s Sensitive Index (SENSEX) has fallen to below its 2024 starting level. These losses have come alongside a series of events that depressed the market – including the widespread expectation that the US Federal Reserve would not cut interest rates in its March monetary policy meeting, a warning from the chairperson of India’s securities regulator of ‘froth’ in sectors of the Indian market, and a series of revelations about companies’ donations to political parties.

Adani shares and bonds are both down in the past month

This period has been particularly harsh for the Adani Group. On 13 March its cumulative loss in market capitalisation since the start of the year exceeded Rs 1.26 trillion (about US $15.1 billion). Its stocks partially recovered in the following two days, but took another beating after Bloomberg reported that prosecutors in the United States’s Department of Justice are investigating whether an Adani Group company and Group chairman Gautam Adani paid bribes to obtain government contracts. The Bloomberg report was published on the evening of Friday 15 March after Indian stock markets had closed for the week. When the markets re-opened on Monday 17 March, the Adani Group’s stocks lost over Rs 700 billion (about US $8.5 billion) in market capitalisation.

The Adani Group has denied allegations concerning bribery, terming them false, and has told the Indian stock exchange that it is aware of an investigation into an ‘unrelated third party’.

However, the wider market trend suggests that the downturn in Adani stocks may not be a simple reaction to news reports but could be part of a wider ‘correction’ that the Indian stock market is undergoing. Unless there is a trend-reversing intervention that causes the share prices to recover, which could take the form of large block purchases of shares by portfolio investors, institutions or other forms of equity infusion by its owners, the Adani Group may face a correction of up to 30%.

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The campaign to protect India’s Hasdeo forests from coal mining received a boost on 13 February 2024 when prominent Congress leader, Rahul Gandhi, met with leaders of the movement and pledged the support of his party. The indigenous tribal people of the biodiverse Hasdeo forests have been struggling gamely to protect their ancestral homeland from a string of coal projects being developed by the Adani Group. A change of state government in December had disastrous consequences, with dozens of campaigners detained by police while a swathe of forest was felled. Gandhi’s pledge to tackle Adani and stop the mines promises to become a major issue in the area during the forthcoming national elections.

On Tuesday, 13 February 2024, prominent Indian Opposition leader, Rahul Gandhi, met with campaigners battling to save India’s Hasdeo forests from a slew of coal mines being developed by the Adani Group.

More specifically, he met with representatives of Hasdeo Aranya Bachao Sangharsh Samiti (HABSS) or the Committee for the Struggle to Save Hasdeo Aranya. After a detailed discussion with HABSS’s co-convenor Umeshwar Singh Armo, Gandhi assured the delegation that the Congress stands with the Adivasis (tribals) of the Hasdeo forest and will include a commitment to declare the entire forest region a ‘no-go’ area for coal mining in its election manifesto for the upcoming general election.

Gandhi, who is currently on a march from east to west across the Indian sub-continent, met the delegation at Jajga village in the Sarguja district of northern Chhattisgarh, a 90-minute drive from the Adani-operated Parsa East Kente Basen (PEKB) coal mine in the Hasdeo forests, which supplies coal to power stations in the state of Rajasthan.

In a public address shortly after the meeting, Gandhi called out Adani saying, ‘I saw a huge Adani office nearby here today. Even the road signs have Adani’s logo on them. Wherever you turn in the country – be it ports, airports, infrastructure, forests, seas, rivers – wherever there is wealth in the country, the government is handing it over to Adani’.

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