The latest Financial Times report targetting Adani Group "is just noise from a long time ago", global financial services firm Cantor Fitzgerald noted, asserting that the financial market appeared to have shrugged off the report.
The financial advisory firm's report said the market is inferring that the media article against the conglomerate was an "immaterial story".
Adani Enterprises shares closed 8.2% higher on Thursday at Rs 3,398.2 as Adani Group's market capitalisation continued to gain for the tenth consecutive day.
On Wednesday, London-based Financial Times, citing documents from George Soros-backed Organized Crime and Corruption Reporting Project (OCCRP), accused the Adani Group of fraud and selling low-grade coal as high-value fuel back in 2013 to Tamil Nadu Generation and Distribution Company, or TANGEDCO.
The consistent rise in the group's market capitalisation over the past year shows investors have reposed faith in the Adani Group companies despite allegations.
The Adani Group denied all allegations and questioned the timing of the latest report when general elections are underway in the country.
A Financial Times article accused the Adani Group of importing low-quality coal and selling it to state-owned entities priced as high-grade coal in 2013.
When Cantor Fitzgerald reached out to Adani Group, the conglomerate noted that this specific purchase order to a Tamil Nadu company was a fixed-price contract, which the company won through an open, competitive, and global bidding process.
The Adani Group, according to Cantor, was contractually obliged to supply coal to the Tamil Nadu company at a predetermined price.
"The supplier under this tender (Adani) could supply coal that had a gross calorific value (GCV) between 5,800 and 6,700. If the supplier supplied coal with a lesser GCV, it would face a penalty taken out from the pre-determined payment amount," the Cantor report said.
The report further said that the conglomerate said that the quality of the coal was tested not by the supplier, but by the receiver.
"The payment is then based on these findings. Thus, the assertion that Adani could buy lower GCV coal and sell it as higher GCV coal appears to not be plausible given testing is done by the buyer and payment is based on testing," it said.
According to Cantor, Adani Group further noted that the coal it delivered was within 100 GCV points, and therefore, considered permissible for full payment.
Interestingly, the report pointed out that the FT article was based on customs and Directorate of Revenue Intelligence (DRI) reports.
"It is worth noting that, during the alleged time period (2012-2014), DRI and customs accused all coal importers of mis-declaring the quality of coal to be lower than it actually was. As a result, they wanted additional customs duties. So the fact that this report argues against what DRI/customs was saying back then also raises a red flag, in our view."
Cantor Fitzgerald and/or its affiliates is a market maker in Adani Enterprises Ltd.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)
