It was on Jan 25, 2023, exactly a year ago, when news arrived at breakfast that a short-seller in New York had put up a compilation npilation of allegations against Adani Group online.
Fatuously self-styled as a ‘research report’, it contained same old allegations my detractors had been trying to resurrect by flogging them through their allies in media. It was a cunningly crafted set of selective half-truths sourced from disclosed and publicly available information.
Lies and baseless allegations against us were nothing new. So, after issuing a comprehensive response, I thought no more about it.
But, as they say, a lie crosses the world even as truth is lacing up its shoes. For me, having been raised on a staple diet of power of truth, this attack was a lesson on power of falsehoods.
Two-Dimensional Impact: Financial and Political Ramifications
Impact of short-selling attacks is normally limited to financial markets. This, however, was a unique two-dimensional attack: a financial one, of course, and one that played out in political space, each feeding off the other
Aided and abetted by some in media, these lies against us were corrosive enough to substantially erode our portfolio’s market cap. Typically, capital markets are more emotional than rational. What pained me even more is that thousands of small investors lost their savings.
Had our detractors’ plan fully succeeded, domino effects could have crippled many critical infrastructure assets, seaports and airports to power supply chains-a catastrophic situation for any country. However, thanks to our solid assets, robustness of our operations and high-quality dis- closures, the more informed financial community, including lenders and rating agencies, didn’t get swayed and stood solidly with us.
Unprecedented Strategy: Investor Protection & Financial Fortification
We couldn’t fall back on a precedent to handle this situation. Our confidence in the solidity of our businesses dictated our largely contrarian strategy. Our very first decision was to protect our investors After completing FPO of Rs 20,000 crore, we decided to return FPO proceeds. This move, unprecedented in corporate history, underscored our commitment to investor welfare and ethical business practices.
In the fog of this war, our biggest weapon was adequate liquidity. To augment our strong cash reserves of 30,000 crore, we further fortified our financial position by raising an additional Rs 40,000 crore, equal to the debt repayment for next two years. We did this through stake sales in our group companies to investors of immaculate global standing, like GQG Partners and QIA. This got us an expansive war-chest of cash reserves, restored confidence in markets and backed our goal of creating world-class infrastructure for India.
Proactive Portfolio Protection, Record EBITDA Growth
By pre-paying 17,500 crore of margin-linked financing, we insulated and ring-fenced our portfolio from market volatility. I asked my leadership team to focus on businesses. This catalysed a record-breaking EBITDA growth of 47% in the first half of FY24, with Adani portfolio delivering its highest-ever quarterly profit in Q3 FY24. Our bat was doing the talking.
We executed an extensive engagement programme for our financial and non-financial stakeholders. Finance team alone conducted close to 300 meetings across the world in initial 150 days, ensuring affirmation of ratings across 104 entities by nine rating agencies.
Stakeholder Trust: Transparency Yields Growth
Banks, fixed income investors, sovereign wealth funds, equity investors, JV partners and rating agencies have always been our key stakeholders. Their due diligence, scrutiny and reviews underpin our comprehensive and transparent disclosure regime.
We focused on transparently outlining facts and narrating our side e of the story. This led to a declining influence of negative campaigns against our group. A testament to the change in public perception is the significant growth in our shareholder base, a primary target of FPOs. Over this challenging year, our shareholder base expanded by 43%, reaching nearly 70 lakh.
Sustained Growth: Key Investments and Milestones
Additionally, we remained committed to maintaining our growth momentum. The group continued its investments, evidenced by our asset base growth to 4.5 lakh crore. This period marked the launch of several key projects, including the world’s largest renewable energy generation site in Khavda, a new copper smelter, a green hydrogen ecosystem, and long-awaited redevelopment of Dharavi.
Outreach Oversight: Addressing Communication Gaps
In hindsight, the crisis uncovered a fundamental weakness I had let grow – we had not paid enough attention to our outreach mechanisms, Few outside the infrastructure finance community knew of the size, scale and quality of what Adani Group had done or was doing.
We had all along naively believed that our non- financial stakeholders too knew us and the truth about us – that our financials were robust, that our governance was impeccable, that our roadmap to growth was measured, and that we play an important role in building India’s critical infrastructure.
This experience underscored the necessity of engaging effectively with our non-financial stake- holders. We had failed to proactively counter twisted narratives on our debt levels and unfounded accusations of political partisanship, resulting in the spread of distorted perceptions.
Strength in Numbers: Resilience and Lessons Learned
Fact is for our class of transport and utility companies, we have one of the lowest debt-EBITDA ratios (for the half year ending Sept 2023, this was 2.5x). Further, with an infrastructure business footprint in 23 Indian states governed by political parties across the spectrum, we are truly politically agnostic.
Trials and tribulations of past year have taught us valuable lessons, made us stronger and reaffirmed our faith in Indian institutions.
While this devious attack on us and our strong countermeasures – will no doubt become a case study, I felt compelled to share my learnings because, it was us today, it could be someone else tomorrow.
I am under no illusion that this is the end of such attacks. I believe we have emerged stronger from this experience and more unwavering in our resolve to continue our humble contribution to the India growth story.
