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Adani Group Shares Recover Amid Allegations of Supplying Low-Grade Coal

On Wednesday, Adani Group shares largely rebounded by market close following a news report alleging that the conglomerate supplied low-grade coal as higher quality coal to a state-owned power generation company a decade ago.

Adani Enterprises, the group’s flagship, recovered from a low of Rs 3,075 to close 0.61% higher at Rs 3,134.75. Adani Ports ended at Rs 1,377.90, down 0.54%, after hitting a day’s low of Rs 1,364.35. Meanwhile, Adani Total Gas increased by 0.47% to Rs 934.55, Adani Energy Solutions advanced by 2.33%, Adani Power rose by 1.68%, and Adani Green Energy edged up by 0.14%.

The allegations were reported by the Financial Times, which cited a report from the Organized Crime and Corruption Reporting Project (OCCRP). According to the report, in January 2014, the Adani Group allegedly bought low-grade coal from an Indonesian company at $28 per tonne. This coal was then purportedly sold to the Tamil Nadu Generation and Distribution Company (TANGEDCO) as high-quality coal for an average price of $91.91 per tonne.

An Adani spokesperson denied the allegations, describing them as “false and baseless.” The spokesperson asserted, “The suggestion that Adani Global Pte Ltd supplied inferior coal to TANGEDCO, as compared to the quality standards outlined in the tender and purchase order, is incorrect.” They further clarified that despite the volume of data and time elapsed, as well as contractual and legal constraints, the coal’s quality is tested at the receiving plant.

In December, the Delhi High Court directed the Central Bureau of Investigation (CBI) and the Directorate of Revenue Intelligence (DRI) to investigate allegations of over-invoicing of coal imports and equipment by several companies, including Adani Group and Essar Group. The court emphasized the need for a thorough and swift investigation to uncover the truth and take appropriate legal action against any erring companies.

The Adani Group previously dismissed the over-invoicing allegations, stating that the issue had been conclusively settled by India’s highest court. The group noted that the DRI’s show-cause notice alleging overvaluation in coal imports was quashed by the appellate tribunal (CESTAT). Additionally, the Supreme Court of India dismissed the DRI’s appeal as withdrawn on January 24, 2023, appreciating the government’s decision to avoid futile litigation.

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