The Wire Staff 
New Delhi: Unlike what was commonly believed, the Adani Group does not own Ambuja Cements and ACC, the Morning Context reported, adding that the cement companies are owned by entities that are controlled by Vinod Adani, the elder brother of the group’s founder Gautam Adani.
The group had last year acquired Swiss-based Holcim’s cement businesses in India – Ambuja Cements and ACC Ltd – for $10.5 billion (around Rs 85,000 crore). This was the conglomerate’s largest-ever acquisition, and per the company at the time, it was India’s largest ever M&A transaction in the infrastructure and material space.
The deal made Adani the second largest cement player in the Indian market, after Aditya Birla Group’s UltraTech Cement.
The group used a special purpose vehicle (SPV) called Endeavour Trade and Investment Ltd to buy the two cement companies from Holcim Group. The Mauritius-based entity is owned by Vinod Adani, TMC reported, citing the final offer letter issued by Ambuja Cements
“This means neither Adani Enterprises nor any of the Adani group’s other listed companies in India or their subsidiaries acquired Ambuja Cements/ACC. Even though group chairman Gautam Adani projected to the world at large and shareholders that it is the Adani group of companies which acquired the cement companies,” the report said.
This is significant as US-based short seller Hindenburg Research had accused the conglomerate of improper use of offshore tax havens.
According to Forbes, Hindenburg mentioned Vinod Adani at least 151 times in the January 24 report, alleging that the entities controlled by him were used as a “conduit for money laundering and share-price manipulation”.
The short seller’s report led to a stock rout halving the conglomerate’s market valuation.
Adani Group, however, responded to Hindenburg’s allegations, saying Vinod Adani does “not hold any managerial position in any Adani listed entities or their subsidiaries and has no role in their day to day affairs”.
The Hindenburg report said that Vinod “manages a vast labyrinth of offshore shell entities” that have “collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals.”
The report identified entities in Mauritius, Cyprus, the United Arab Emirates, Singapore, and several Caribbean Islands. It added these entities “regularly and surreptitiously transact with Adani”.
The Hindenburg report, however, didn’t comment on Adani Group’s acquisition of Ambuja Cements and ACC.
The Morning Context had in May 2022 reported how Adani Group won the bid to buy the two cement makers, edging out Kumar Mangalam Birla and Sajjan Jindal.
The SPV helped raise Adani Group cheap credit, faster. “This was a huge transaction. Whoever could arrange the money fast and seamlessly was going to have a definite edge over others,” Ketan Mukhija, partner at law firm Link Legal, had told the news outlet at the time.
He had also said that Adani Group’s transaction through an offshore entity will enable them to steer clear of pricing restrictions under the exchange control regulations in India.
Seeing what happened with Vodafone and Cairn, Holcim may have preferred this way of carrying out the transaction, considering India has stringent tax laws, TMC reported.
However, while the group has denied Vinod Adani’s ties to his younger brother, Gautam Adani, several investigations, including TMC’s report on the Ambuja Cements-ACC deal, reveal something else.
Forbes reported that Vinod Adani was at the heart of two massive Adani Group deals with French energy giant TotalEnergies.
The French energy giant had bought 20% of Adani Green in 2021 for $2 billion. That stake was worth about $10 billion at the end of August 2022, Mint reported, citing a statement from TotalEnergies. In 2018, it had joined hands with the group for a liquefied natural gas venture – Adani Total Gas.
Business Today reported on February 15 that the French giant lost Rs 1.55 lakh crore in market wealth in two Adani group companies – Adani Total Gas Ltd and Adani Green Energy Ltd.
Also read: Hindenburg Spotlights an Offshore Adani-Related Entity That Ed Had Linked to AgustaWestland Scam
A web of offshore entities
The SPV, Endeavour Trade and Investment Ltd, earlier mentioned, which was used to buy Ambuja Cements and ACC, is promoted by Acropolis Trade and Investments Ltd, another Mauritius company, TMC reported.
Forbes had earlier reported, citing Indian stock exchange filings in June 2020 and August 2022, that Vinod Adani is the ultimate beneficial owner of the Mauritius-based Acropolis Trade and Investments Ltd.
Acropolis is the promoter of Xcent Trade and Investment Ltd, which owns Endeavour Trade and Investment Ltd, TMC reported. Subir Mittra, who is the chief executive of the Adani family office, is director at both these firms.
Acropolis lists Mittra and Vinod Adani as directors, the report added, citing the corporate and business registration department in Mauritius.
Acropolis, in turn, is owned by Adani Global Investment DMCC in Dubai, which was founded in February 2016, the report said.
So, the report concluded, Vinod Adani is the ultimate beneficiary of the SPV that bought Ambuja Cements and ACC. Despite that, the Competition Commission of India says that “Endeavour is a newly incorporated company and belongs to the Adani group.”
Ambuja Cements is owned by Holderind Investments Ltd (63.11%) and Endeavour Trade and Investment Ltd (0.04%), the report, citing shareholding data as of December 2022, said.
Prior to this deal, Holderind, which is a Mauritius-based investment vehicle, was owned by Holcim. Since Holderind was sold entirely to Endeavour, Vinod Adani is also its ultimate beneficial owner, it said.
Ambuja Cements and ACC have a common chief executive, Ajay Kapur. Gautam Adani is the non-executive chairman of Ambuja Cements; his son, Karan, is a director at the company. Karan is also on the board of ACC, along with Vinay Prakash, who is a director of Adani Enterprises. The cement firms have a common chief financial officer, TMC reported.
So therefore, if Adani Group sells a stake in Ambuja Cements and ACC, the ultimate beneficiary of the transaction, considering the ownership structure, will be Vinod Adani, TMC said. The Financial Times had reported that Adani Group is looking to sell 4-5% of his stake in the cement business to raise about $450 million.
Also read: No Formal Position in Listed Adani Entities but Vinod Adani Plays a Key Role in Empire: Report
The shareholding pattern
In June 2015, Vinod Adani acquired stakes in two Adani Group firms – Adani Transmission (8.25%) and Adani Ports and Special Economic Zone (6.32%). At the time, he also held an 8.25% stake in Adani Enterprises. “All three entities classified Vinod Shantilal Adani as part of the promoter/promoter group,” TMC said in its report.
The news outlet reported that he cashed out all his investments in the three Adani Group companies to three Mauritian funds – Worldwide Emerging Market Holding, Universal Trade and Investments and Afro Asia Trade and Investment.
In 2021, Total purchased a 20% minority stake in Adani Green Energy. This was the French company’s biggest investment in renewables, it had said.
TMC reported that as part of the deal, Total acquired Universal Trade and Investments. Universal Trade and Investments is owned by another Mauritius entity called Dome Trade and Investments Ltd. This transaction gave Total a stake of 16.4%.
The French company acquired an additional 3.6% stake in Adani Green Energy through Acme Trade and Investment, which was also owned by Dome Trade and Investments, the report said.
Both Acme and Universal are classified as public shareholders of Adani Green Energy.
Interestingly, in 1994, two months after establishing a company in the Bahamas, Vinod had requested to change his name on the company’s documents from Vinod Shantilal Adani to Vinod Shantilal Shah, Forbes reported, citing the International Consortium of Investigative Journalists’ Panama Papers leak.
Although the Adani Group in its response to Hindenburg’s allegations has claimed that Vinod Adani has no official role and is not a related party, the investigations reveal something else.
Under the Companies Act, a person or a close family member is a related party of a company if such person: has control or joint control/ significant influence over the company; or. is a key management personnel of the company or its parent company.
“The Companies Act lists nine categories of persons that qualify as related parties. The definition becomes broader for listed companies, especially when it comes to insider transactions. The issue is that there is a dynamic treatment of related parties between the Companies Act, Reserve Bank of India and Securities and Exchange Board of India,” Harish Kumar, partner at Luthra & Luthra told TMC.
“Rather than a question law, it’s a question of the specific nature of the relationship between the entities. You need to find out who is calling the shots, if the listed entity promoter is controlling the decisions of the offshore entity then you can say that the latter is a shadow entity of the former,” he added.
The Supreme Court on March 2 had asked the Securities and Exchange Board of India to check “whether there has been a failure to disclose transactions with related parties” by the Adani Group.