New Delhi: Analysis by the Financial Times newspaper of India’s foreign direct investment (FDI) remittance data has revealed that offshore companies “linked to the Adanis” and “bearing funds of unclear provenance” have invested almost half of all the FDI that came into the Adani Group of companies.
This, says the London-based financial daily, highlights “the role of hard-to-scrutinise money flows in financing the Indian tycoon’s business empire, ” who aligned himself “with Prime Minister Narendra Modi’s development agenda.”
These “offshore companies linked to the Adanis” invested at least $2.6 billion in the group between 2017 and 2022, which is 45.4% of the more than $5.7 billion it received in total FDI over the period.
The analysis concludes that the total amount of opaque overseas investments in Adani companies is an underestimation and the actual value will be higher. This is because official FDI numbers in India exclude foreign portfolio investments, “which fall under a different reporting regime”, and also investments in listed companies amounting to less than 10% of their paid-up capital.
The newspaper writes that “most offshore shell companies supplying FDI to the conglomerate have been disclosed as part of Adani’s ‘promoter group’, meaning they are closely tied to Adani or his immediate family.”
The biggest investments were from two companies directly or indirectly linked to Gautam Adani’s elder brother Vinod, listed as a Cypriot national, who lives in Dubai, as per the newspaper. The Adani Group, while denying the charges made by Hindenburg Research in January had distanced itself from Vinod Adani, but in a dramatic turnaround some weeks later, said that he should be treated as the same as the Adani Group, viz., “the Adani Group and Vinod Adani should be seen as one.
Also Read: Questions SEBI Needs to Ask Adani Group, Now That It Is Owning Up to Brother Vinod
The report says that analysts are concerned about the money moving from obscure Mauritius entities because it was impossible to ascertain whether or not the funds had been “round-tripped” – or sent “out of India to a regulation-light offshore jurisdiction, then brought back into a connected company to boost its share price.” According to Indian investment rules, round-tripping arrangements are prohibited.
The rapid, debt-fuelled growth of Adani’s companies drew scrutiny last year after their share prices shot upwards dramatically, briefly making Gautam Adani the world’s second richest person. But Gautam Adani’s and the Group’s meteoric rise was stalled when the US short seller, Hindenburg Research, alleged that “a labyrinthine network of mostly Mauritius-based shell companies appeared to have been used to route funds into India to manipulate share prices of Adani’s seven listed companies or make their balance sheets look healthier.” The Adani Group continues to deny that charge.