The Adani Group, a major Indian conglomerate, has vehemently denied allegations that it supplied low-grade coal masquerading as high-quality coal to a state-owned power company in Tamil Nadu. The company's stock prices initially dipped following the news report but recovered by the close of the market day.
News Report Sparks Controversy
The Financial Times, citing a report by the Organized Crime and Corruption Reporting Project (OCCRP), alleged that in January 2014, Adani Group purchased low-grade coal from an Indonesian company at a price of $28 per tonne. This coal, according to the report, was then allegedly sold to the Tamil Nadu Generation and Distribution Company (TANGEDCO) for a significantly higher price of $91.91 per tonne, classified as high-quality coal.
Adani Group Denies Wrongdoing
An Adani Group spokesperson swiftly responded to the allegations, dismissing them as "false and baseless." The spokesperson emphasized that the coal supplied to TANGEDCO was subject to quality testing at the receiving plant, irrespective of the supplier's initial declaration.
"The suggestion that Adani Global Pte Ltd supplied to TANGEDCO inferior coal, as compared to the quality standards laid down in the tender and PO [purchase order], is incorrect," the spokesperson firmly stated.
The company acknowledged the challenges in addressing specific details due to the large volume of data and the time elapsed, along with contractual and legal considerations.
Past Allegations and Investigations
This is not the first time the Adani Group has faced scrutiny over coal imports. In December 2023, the Delhi High Court directed the Central Bureau of Investigation (CBI) and 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 Adani Group has previously denied allegations of over-invoicing, maintaining that the issue of import coal overvaluation was settled by India's Supreme Court. The company added that the DRI's claims and subsequent appeal were dismissed.
Market Reaction and Rebound
The initial news report triggered a slight decline in Adani Group's stock prices. However, by the market close, most Adani Group shares had recovered. The company's flagship, Adani Enterprises, even closed slightly higher than its opening price.
This turn of events suggests that investors may be awaiting further developments before reacting decisively to the allegations.
The Road Ahead
The Adani Group's strong denial and its stock market rebound indicate the company's confidence in its position. However, the ongoing CBI and DRI investigation casts a shadow of uncertainty. Only time will tell whether the investigations will uncover any wrongdoing or exonerate the Adani Group completely.
This controversy underscores the importance of transparency and accountability in the coal industry, particularly when dealing with large corporations and government contracts.
