[Goanet] Indian Billionaire Gautam Adani Finds A Savior In The Modi Govt (Forbes)

roger dsouza Fri, 05 Dec 2014 11:20:10 -0800

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<http://www.forbes.com/sites/meghabahree/>Megha Bahree
<http://www.forbes.com/sites/meghabahree/>Contributor

Indian Billionaire Gautam Adani Finds A Savior In The Modi Govt (Forbes)

Indian billionaire Gautam Adani
<http://www.forbes.com/profile/gautam-adani/>-owned Adani Ports and Special
Economic Zone announced yesterday that the new Narendra Modi-led government
has granted it environmental clearances that legalize its sprawling SEZ in
Mundra in the western state of Gujarat.

, the SEZ’s status had been in limbo since January when the Gujarat High
Court declared it illegal and ordered the companies that had set up
factories in there to stop all work. Reason: The SEZ had been built without
getting an environmental clearance. Under Indian law a project the size of
the SEZ would need one from the federal environment ministry before it can
lay a brick.

The company had appealed the Supreme Court, India’s highest, for a review
of that decision. Although the Supreme Court refused to stay the lower
court’s decision, it said existing tenants in its SEZ could keep operating.

With hundreds of millions of dollars already invested–albeit in a project
in legal limbo–the question at the time was if Adani’s effort had become
too big to shut down. The Gujarat High Court passed the ball on that
decision to the federal government, asking if the project could be granted
a belated environmental clearance. New Delhi in turn asked for a couple of
months to ponder that decision.

But before the then Congress-led UPA government could take a decision,
dates for national elections were announced, effectively blocking it from
taking any big decisions.

This also meant that the ball was being passed onto the next government.
Not a bad thing to happen from Adani’s point of view as even then Modi was
the favored prime ministerial candidate expected to lead the next
government and Modi and Adani have a long, happy history.

The Adani Group <http://www.adani.com/> was established in 1988 and became
publicly traded in 1994. But its real rise happened under Modi’s reign in
Gujarat. From 2002 to last March the group’s revenue rose from $765 million
to $8.8 billion while net profits climbed even faster. During this period
it constructed its SEZ, bought mines in Indonesia and Australia to ensure
it had a steady supply of coal for its thermal power plants in India and
launched Asia’s largest coal import terminal in Mundra in the Gulf of Kutch.

Business <http://www.forbes.com/business/> aside, they were known to be
close on a personal front as well. Modi had been a visible guest at Adani’s
son’s wedding last year in Goa, as I had reported. According to media
reports he had also been using an Adani Group plane to dash to his various
commitments during the campaign phase.

Adani has, over the years, leased 7,350 hectares–much of which he got from
2005 onward–from the government in Mundra. He got the 30-year, renewable
leases for as little as one U.S. cent a square meter (the rate maxed out at
45 cents a square meter). He in turn has sublet this land to other
companies, including state-owned Indian Oil
<http://www.forbes.com/companies/indian-oil/> Indian Oil
<http://www.forbes.com/companies/indian-oil/> Co., for as much as $11 a
square meter. Between 2005 and 2007 at least 1,200 hectares of grazing land
was taken away from villagers.

On this cheap land Adani built his cash cow–the country’s largest private
port by volume–as well as a 4,620-megawatt coal-fired power plant.

In the meantime villagers in the area not only lost grazing land to the
company, they also found that fly ash and saline water from Adani Power
(and a nearby Tata Power <http://www.forbes.com/companies/tata-power/> Tata
Power <http://www.forbes.com/companies/tata-power/> Co. Ltd.) plant were
spoiling the crops and making the soil less fertile.

A panel appointed by the previous federal environment ministry confirmed
the villagers’ complaints–and fears. It said the Adani SEZ had violated
multiple green rules at different points of its mammoth project–destroying
mangroves, filling creeks and causing land and water degradation by dumping
fly ash. (The company has denied this.)

Yesterday’s decision means that the SEZ is open for new business again.

Anand Yagnik, the lawyer representing the villagers who had originally
filed the case, said he plans to file an appeal with the Gujarat High Court
to review the federal government’s environmental approval for the SEZ.

Modi was declared the winner on May 16 and formed his government later that
month. Within less than two months Adani Group’s troubled SEZ has been
rescued.

That’s efficiency

<http://www.forbes.com/sites/meghabahree/>Megha Bahree
<http://www.forbes.com/sites/meghabahree/>Contributor

Contact Megha Bahree
<http://www.forbes.com/sites/meghabahree/2014/03/12/doing-big-business-in-modis-gujarat/>

The author is a Forbes contributor. The opinions expressed are those of the
writer.

*Doing Big Business In Modi's Gujarat*

This story appears in the March 24, 2014 issue of Forbes Asia.

*When his son was married in the coastal state of Goa last year, Indian
billionaire Gautam Adani’s guest list included the richest man in the
country and many a chief executive and top banker and bureaucrat. Most,
however, just stopped by the night before to bless the happy couple and
skipped the actual wedding. But one prominent friend stayed through all the
ceremonies over a couple of days, genial and relaxed like a favorite uncle.
It was Narendra Modi, chief minister of Adani’s home state of Gujarat.*

Ranked No. 609 <http://www.forbes.com/profile/gautam-adani/> in the world
with an estimated worth of $2.8 billion, Adani
<http://www.forbes.com/profile/gautam-adani/> runs India’s largest port, a
power company and a commodities trading business. A large chunk of his
business <http://www.adani.com/> is located in Gujarat, and the government
under Modi <http://www.narendramodi.in/>, who has been running the state
since 2001 and now is the favored prime ministerial candidate in the
national elections this spring, has been more generous to Adani than to any
other industrialist there.

Adani has, over the years, leased 7,350 hectares–much of which he got from
2005 onward–from the government in an area called Mundra in the Gulf of
Kutch <http://en.wikipedia.org/wiki/Gulf_of_Kutch> in Gujarat. FORBES ASIA
has copies of the agreements that show he got the 30-year, renewable leases
for as little as one U.S. cent a square meter (the rate maxed out at 45
cents a square meter). He in turn has sublet this land to other companies,
including state-owned Indian Oil Co., for as much as $11 a square meter.
Between 2005 and 2007 at least 1,200 hectares of grazing land was taken
away from villagers.

India’s most alluring GDP growth story looks different if you’re Gautam
Adani or a villager living off the land. (Photo: Joe Athialy)

Under Indian law land meant for grazing cattle can be used for something
else only if it’s in excess. There’s a formula applied to calculate. Even
then the village chief has to give permission to take the land. Villagers
in Adani’s SEZ say their grazing land was signed away by earlier village
chiefs without their knowledge. They have filed multiple cases in the
Gujarat High Court to contest the government’s actions, going back to 2005
and even earlier. Several cases are still pending.

On that cheap land Adani has built his cash cow–the country’s largest
private port by volume–as well as a 4,620-megawatt coal-fired power plant.

Anand Yagnik, a lawyer representing some of the Mundra villagers, says,
“The basic philosophy of a liberal economy is to allow market forces to
play its role. Then why do you have to allocate scarce resources to
industrial houses at throwaway prices when they have sufficient capital to
pay market rates?”

Modi, it should be noted, is posed as the candidate of Indian economic
revival in the national race on the basis of his Gujarat record. In
February he gave a speech touting the benefits of more open business
competition in India.

On the surface the busy Adani port exemplifies such commerce. On an earlier
February day two tugboats were guiding a loaded ship toward the jetty even
as another ship was being loaded with containers. In one section of docks,
new Maruti Suzuki cars were being cleaned for shipment. In another,
commodities excavated from the region–bauxite, bentonite, iron ore–lay in
individual piles, waiting to be loaded for export.

In the most recent available data, Gujarat’s GDP shows a compounded average
growth of 13.4% during Modi’s tenure, outstripping the national rate of
7.8% for the period. Thanks to Modi’s policies it has attracted investment
in sectors like auto manufacturing and solar power. It has made advances in
rainwater harvesting and irrigation, and offers a near 24-hour electricity
supply statewide. (In contrast, the country has averaged a power deficit of
up to 9% for the past three years, though that has improved much of late.)

Miles of smooth roads, occasionally lined with pink, orange and white
bougainvillea and kept clean by sweeping machines, let you zip around the
massive city within a city that is Adani’s special economic zone. The idea
is to have export-focused companies set up their factories in the SEZ,
close to the Adani port. As additional incentives the billionaire has built
a 40-mile railway line, linking the port to the national railway network,
as well as a 1.1-mile-long private airstrip that SEZ tenants can use for
their chartered flights. So far 23 companies have signed up. Thus Gujarat
has gained some output and employment, but Adani has captured the rents.

While none of the other companies in Kutch, or the rest of Gujarat for that
matter, have received the kind of largesse on land rates as Adani, they,
too, have benefitted from the Modi government’s bent. It is one that,
whatever Modi may now be saying on the campaign trail against crony
capitalism and on behalf of the downtrodden, is even less mindful of
environmental damage and villager prerogatives than are Indian land-use
practices in general.

At a political rally in distant Lucknow in early March, Modi said farmers
were his friends and he would stand by them. He also said he would “not
allow anyone to loot the exchequer.”

But spend time around the villages of Kutch and a vastly different picture
appears. This region was famous for its crops of sapodilla, a brown, fleshy
fruit slightly smaller than a tennis ball, as well as dates, coconuts and
castor. Area farmers say that that’s no longer the case. (Official stats
seem to end in 2006.) Fly ash and saline water from Adani Power and a
nearby Tata Power Co. Ltd. plant are spoiling the crops and making the soil
less fertile, they say. For miles at a stretch the chimneys of the two
power plants are visible against the horizon. Gajendra Sinh Jadeja, the
28-year-old head of Navinal village, says the Gujarat government took some
930,770 square meters of his village’s grazing land for Adani’s SEZ. Adani
got it for 19 cents a square meter.

Traversing a couple of nearby barren fields, Jadeja says he had been
growing alternately cotton, millet and castor there. Now patches of white
salt are easily visible across stretches of the fields and have become a
common sight across farms. “The saline water ruined the soil, and the poor
production now is just not worth it,” he says.

On another field there is a scraggly growth of castor, no comparison to the
tall, lush green field that he remembers.

The village of Zarapara with its 15,000 residents is one of the largest in
the area. When the government allotted a thousand acres of its grazing land
to the Adani SEZ, at roughly 19 cents a square meter, the villagers filed a
case that reached India’s highest court, the Supreme Court. Before judgment
there, an out-of court settlement was reached under which Adani Group was
to offer villagers 400 acres of grazing land. The company says it has
offered the land while the villagers say they haven’t received any so far.

Zarapara was once famous for its sapodillas. “In season five trucks filled
with [sapodillas] would go every day to the market from this village,” says
Zarapara resident Naran Ghadavi, whose farm is 3 miles from the Adani power
plant. “Now we only produce enough to fill one small van.”

Ghadavi, 30, blames the decrease in output on the saline water and the fly
ash from the Adani power plant that has polluted the groundwater tables and
broken the pollination process. Pointing to his white shirt, the small,
wiry man says, “Earlier our clothes used to turn yellow [from the pollen].
Now when the morning dew drips from the tree leaves, the ground turns black
from the fly ash.”

The villagers’ lawyer Yagnik argues that Modi, by giving away land so
cheaply, is depriving the state treasury of funds. “This kind of
subsidization of scarce resources eats away at the public exchequer, and
that has a direct impact on distributive justice because then the state
doesn’t have enough resources to deal with this inequality,” he says.

After years of receiving complaints of environmental abuse, the federal
environment ministry finally, in 2012, named a panel–known as the Sunita
Narain Committee after the woman chairing the process–to look into them.

In a report last April Narain’s group confirmed the villagers’
complaints–and fears. It said the Adani SEZ had violated multiple green
rules at different points of its mammoth project–destroying mangroves,
filling creeks and causing land and water degradation by dumping fly ash.

At the power plant thousands of gallons of water sucked in from the sea
through one channel are let out through a pipeline. Once sucked in it’s
kept in a reservoir from where it’s pumped into the turbines to generate
electricity and eventually is pumped back out.

The panel found that the reservoir didn’t have any lining to protect the
groundwater. “The examination by the committee shows that the soil in the
area is permeable and without safeguards it will lead to contamination.
This is a clear violation of the environmental clearance condition,” its
report said. The committee recommended that Adani create a fund that was
either 1% of the entire project cost or $37 million, whichever was higher.
It also said the company should reconstruct both the channels that are used
to take in and send back the water, as well as repair or construct anew the
reservoir with impervious lining at the bottom and sides.

But almost a year after the recommendations were made the company appears
to have done nothing. Meantime, it has plans to expand its 7,350-hectare
SEZ to 18,000 hectares.

In an e-mailed response to questions, a spokeswoman for Adani Group said it
had been allotted government land after following all established processes
and used valuations applicable at the time, ahead of subsequent
improvements. “It will be completely misleading if we compare the price of
the land before development and after development as an entrepreneur takes
risk of investing a large amount to develop this land, and if the
commercial venture fails, the consequences are only to the developer,” the
company said.

Adani Group said salinity ingress was a local phenomenon and that its power
plant used technology to ensure that there was no stray fly ash. It also
refuted the observations of the Sunita Narain committee and said while any
large development would affect the environment, it was certain that its net
impact was positive. Also, all government requirements were followed in
setting up its various projects.

The Modi administration did not reply to repeated interview requests.

In today’s India and elsewhere, it is not unusual for governments to offer
benefits to powerful private interests, especially to attract investment in
remote areas. And as noted, Adani is not the sole beneficiary of Modi’s
blessings.

“But what is unusual–and where the problem arises–is when you set something
up on this scale without competitive bidding,” says Aakar Patel, a
columnist at Indian newspaper Mint and a longtime Gujarat observer.

The social dynamics are much the same at the 4,000-megawatt power plant of
Tata’s wholly owned subsidiary Coastal Gujarat Power, a few miles down the
coastline from the Adani plant. It opened in March 2012 under a different
arrangement, this one a federal initiative to spur big energy plants.
Several of them have been announced, but this one from Tata is the first to
go live. Under the deals, the federal government provides the operators
with the land and all clearances. However, land is a state subject, so it
is the state government–Modi’s in this case–that had identified and
allocated the land.

Credit: Megha Bahree

In Kutch fishermen and their families set up camp on the beach. Tagadi
fishing village is one such camp on the banks of what is now the Tata
plant’s outflow channel. Dawood Umar Jaam, 43, has been fishing in the area
for the past five years. He has seen a 60% drop in his catch in the last
few months and blames it on the plant. As the plant takes in seawater, it
also sucks up fish that are still small, killing them instantly, says a
fishermen’s trade union known as MASS, active in the area. The plant
releases hot water back into the sea, raising temperatures in the immediate
vicinity, killing more fish and changing migratory patterns.

Jaam, who has a family of six in Tagadi, takes a loan of maybe $2,000 prior
to the fishing season to repair his nets and otherwise get ready. He would
earn enough to pay off the loan and save up to about $750 each year, he
says. Not anymore. He doubts he’ll be able to repay more than $350. Just
before he sets off to fish, he points to the boundary fence of his
makeshift house, constructed on three sides using bamboo sticks. Those
sticks used to be covered with fish put out to dry. Now, only a quarter of
the sticks are covered.

The Tata unit says the outfall channel is specially lined with stones to
extend the surface while the water is being discharged so it can cool. “The
outfall channel, which is [4.5 miles] long, ensures that the temperature of
hot water at the discharge point meets the environmental stipulations,” the
company said in an e-mailed statement.

In addition, it says, it’s teaching Tagadi fishermen better practices and
is distributing nets to enhance the catch and providing clean drinking
water.

Back in his adjoining SEZ, things have gotten legally dicier for Adani of
late. Residents of Navinal Village, including the head Jadeja, filed in
2011 a petition in the Gujarat High Court after they lost their grazing
land to the SEZ. In January the court declared the SEZ illegal and ordered
the companies that had set up factories in there to stop all work. Reason:
The SEZ had been built without getting an environmental clearance. Under
Indian law a project the size of the SEZ would need one from the federal
environment ministry before it can lay a brick. (This judgment is pertinent
only to the SEZ and not to the port or the Adani Power plant. The company
had applied for–and received–separate environmental clearances for those,
and that lets them operate legally.)

The Supreme Court, India’s highest, has refused to stay the lower court’s
decision, although it said existing tenants in its SEZ could keep
operating. With hundreds of millions of dollars already invested–albeit in
a project now in legal limbo–the question now is if Adani’s effort has
become too big to shut down. The Gujarat High Court passed the ball on that
decision to the federal government, asking if the project could be granted
a belated environmental clearance. New Delhi in turn asked for a couple of
months to ponder that decision.

Now that India’s election has been set to begin Apr. 7, the federal
government is effectively blocked from taking this decision. As a result
the fate of this project will likely be decided by whoever comes into power
next, and that could easily be a government led by Modi.

*This story has been revised to correct a statement concerning the
proceedings brought by the villagers*

*SBI's $1 billion loan to Adani makes no sense, here's why*

*By Vivek Kaul <http://firstbiz.firstpost.com/author/vivekkaul>* (FirstBiz)

The State Bank of India (SBI) has decided to lend up to $1 billion to Adani
Mining, the Australian subsidiary of Adani Enterprises for the Carmichael
mine in Queensland, Australia. The mine has massive blocks of untapped coal
reserves. The company aims to build the project by end of 2017.

"The MOU with SBI is a significant milestone in the development of our
Carmichael mine," Adani said in a statement released yesterday.

<http://firstbiz.firstpost.com/wp-content/uploads/2014/11/strike-sbi-lock-reuters.jpg>

The State Bank of India(SBI) has decided to lend up to $1 billion to Adani
Mining.

The loan as and when it is extended would be one of the largest given out
by an Indian bank for a foreign project. The question is should SBI be
giving out a loan of up to $1 billion to a company which already has a huge
amount of debt.

Let's take a look at how the numbers look. As on September 30, 2014, the
long term debt of the company stood at Rs 55,364.94 crore. The short term
debt stood at Rs 17,267.43 crore. Hence, the total debt of the company
stood at Rs 72,632.37 crore.

As on March 31, 2014, the total debt of the company stood at Rs 64,979.04
crore. Hence, the total debt of the company has shot up by Rs 7653.33 crore
in a matter of six months.

The question we are trying to answer here is how good is the ability of the
company to service all the debt that it has managed to accumulate. For that
we use results of the last four quarters and calculate the interest
coverage ratio. Interest coverage ratio is essentially the earnings before
interest, taxes and exceptional items (or what is often termed as operating
profit) of a company divided by its interest expense. It tells us whether
the company is making enough money to pay the interest on its outstanding
debt.

The total operating profit of the company over the last four quarters comes
at Rs 8999.92 crore. The interest that the company has paid on its debt in
the last four quarters amounts to Rs 5,733.77 crore. This means an interest
coverage ratio of around 1.57.

As www.investopedia.com points out “The lower the ratio, the more the
company is burdened by debt expense. When a company's interest coverage
ratio is 1.5 or lower, its ability to meet interest expenses may be
questionable.”

While Adani Enterprises' interest coverage ratio is not lower than 1.5 it
is clearly getting there. In fact, things get even more interesting once we
start calculating the interest coverage ratio on the basis of quarterly
data. The interesting coverage ratio for the period of three months ending
March 31, 2014, stood at 2.67. It stood at 1.58, for the period of three
months ending June 30, 2014. And for the period of three months ending
September 30, 2014, it stood at 1.12.

As we can see, the ability of the company to keep paying the interest that
it needs to pay on its debt has come down dramatically during the course of
this financial year. As www.investopedia.com points out “An interest
coverage ratio below 1 indicates the company is not generating sufficient
revenues to satisfy interest expenses.” Adani Enterprises is clearly moving
towards this situation. Further, in a May 2014 report, Bank of America
Merrill Lynch had estimated that the company would have an interest
coverage ratio of 1.2 during the course of this financial year.

What all this clearly tells us is that Adani Enterprises is in an
over-leveraged situation and is getting to a situation where it will find
it difficult to keep paying the interest on its debt. The thing with debt
is that it can work both ways. When a company takes on a higher amount of
debt it gives itself an opportunity to generate higher earnings vis a vis a
situation where it hadn't taken on that debt at all.
If this happens, then these increased earnings are spread among the same
number of shareholders. But at the same time the company runs the risk of
getting into a situation where the projected earnings simply don't come
along and it finds it difficult to keep paying the interest on all the debt
that it has taken on.

Adani Enterprises runs the risk of getting precisely into this
situation. Further
as a Reuters news-report points out
<http://www.ndtv.com/article/india/state-bank-of-india-to-provide-up-to-1-bn-loan-for-adani-australia-coal-mine-621846>
“Much bigger coal rivals, like BHP Billiton and Glencore, have also shelved
coal developments in Queensland at a time when a third of Australia's coal
output is making losses.”

Also, coal prices have fallen over the last few years. As a recent report
in The Hindu points out
<http://www.thehindubusinessline.com/features/investment-world/real-assets/coal-down-in-the-dumps/article6605293.ece>“Globally,
coal prices have been on a downtrend in the last three years and are at the
lowest levels since 2009. Prices of steam coal, a slightly lower grade that
is used in power generation, have halved since 2011 to $62 per tonne now.”

This fall in prices has happened because of the supply not shrinking along
with demand. “For instance, demand from China — the largest consumer of
coal accounting for half of the total global demand — has been slow. After
growing at over 10 per cent annually during 2001-2011, the country’s demand
has fallen — imports were down to 150 million tonnes (mt) in 2013, from 182
mt in 2011. And given the pollution-related issues, it is expected that the
country may look at cleaner sources more actively, holding down demand.
Goldman Sachs estimates that imports will fall to 75 mt by 2018,” The Hindu
points out.

Goldman Sachs expects the demand growth to be 15 million tonnes per year
during 2013-2018, against 60 million tonnes per year it was at during
2008-2012. The supply of coal isn't likely to come down. In case of
Australia the miners have entered into long term “take or pay” contracts
which requires them to pay $20 per tonne of transport costs, irrespective
of the fact whether or not they ship coal. Hence, Australian miners are
likely to continue to ship coal.

What this tells us is that coal is not the best business to be in right
now. Despite these reasons SBI has gone ahead and given a loan of up to $1
billion to Adani Enterprises. This is not a logical decision which takes
into account the facts as they prevail. The only possible explanation for
this decision is the “so called” closeness of Gautam Adani, chairman of
Adani Enterprises to Narendra Modi, the prime minister of India.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

Business <http://www.forbes.com/business> 5/29/2014 @ 9:46AM 5,626 views

Adani Group's Great Barrier Reef Project In Troubled Waters

Deutsche Bank <http://www.forbes.com/companies/deutsche-bank/> Deutsche Bank
<http://www.forbes.com/companies/deutsche-bank/> has refused to fund Indian
conglomerate Adani Enterprises'
<http://www.forbes.com/companies/adani-enterprises/> Adani Enterprises'
<http://www.forbes.com/companies/adani-enterprises/> plans to expand a port
near the Great Barrier Reef in Australia, dealing the project a symbolic
blow, according to a media report.

Juergen Fitschen, Deutsche Bank’s co-chief executive, told shareholders
that the bank would not be involved in the Abbot Point project, which the
world heritage agency Unesco has warned risks damaging the fragile
ecosystem of the reef, the Financial Times reported.
<http://www.ft.com/intl/cms/s/0/c616fd0a-e249-11e3-89fd-00144feabdc0.html?siteedition=intl#axzz32dKGfPUL>

“There is no consensus between Unesco and the Australian government
regarding the expansion of Abbot Point in the vicinity of the Great Barrier
Reef. Our policy requires such a consensus at the least. We therefore would
not consider applications for the financing of an expansion any further,”
the FT reported Fitschen saying.

Th decision by Deutsche Bank, which has previously arranged financing for
companies at Abbot Point port, came after a concerted campaign by
environmental activists.

Adani Enterprises, India’s largest coal importer, had bought the Abbot
Point Terminal in Queensland–one of the country’s bigger coal terminals–for
about $2 billion in May 2011 in an attempt to increase its access to more
energy resources to meet rising demand for power in India.

But the project has been controversial from the start because while it
would unlock billions of dollars worth of coal reserves, that process would
require millions of tons of sediment to be dumped near the reef,
potentially endangering the world heritage-listed site.

Unesco has warned it would place the Great Barrier Reef on its endangered
list because of the port expansion.

Deutsche Bank was not the only global bank to pull back from the
controversial project. The FT reported HSBC chief executive Stuart Gulliver
as saying it was “extraordinarily unlikely it would go near it.”

There’s a very good chance that billionaire Gautam Adani
<http://www.forbes.com/profile/gautam-adani/>-owned company can easily line
up financing from other banks, especially for a project as big as this one.
However, if there is a massive build up in public sentiment against the
project, it’s possible that the tide could still turn against it, forcing
more such withdrawals.

Case in point being another Indian billionaire Anil Agarwal
<http://www.forbes.com/profile/anil-agarwal/> whose London-listed Vedanta
Resources <http://www.forbes.com/companies/vedanta-resources/> Vedanta
Resources <http://www.forbes.com/companies/vedanta-resources/> was denied
permission a few years ago to mine bauxite in a forest in the eastern
Indian state of Orissa after massive public outrage against the project, a
historic decision at that point as I reported then
<http://www.forbes.com/sites/meghabahree/2010/08/24/how-to-block-a-billionaire/>
.

Vedanta had been trying to mine bauxite in a forest called the Niyamgiri
Hills which had been home for generations to an indigenous tribe of 8,000
called the Dongria Kondh who had been living off the bounty of the thick
forests. The region was also had an estimated 2 billion tons of bauxite
along a 300-mile belt. Hence the clash.

Vedanta had first built an aluminum refinery near the proposed mining site
and was importing bauxite from other regions to fuel it while it awaited
the greenlight on its mining plans.

In the midst of the protests against the proposed mining, Amnesty
International issued a damning report on the refinery and the proposed
mine–harsh enough that the Church of England and the Joseph Rowntree
Charitable Trust sold their $5.7 million and $2.9 million investments,
respectively, in Vedanta.

Around the same time India’s then environment minister set up a committee
to examine the complaints raised against Vedanta and found Vedanta had
acted with ‘total contempt for the law;’ that local officials have
‘colluded’ in the company’s illegal activity; that ‘it is established
beyond any doubt that the [mining] area is the cultural, religious and
economic habitat of the Dongria Kondh’ and that to allow Vedanta’s mine
would be ‘illegal.’
<http://www.forbes.com/sites/meghabahree/2010/08/17/is-this-the-end-to-vedantas-mining-ambitions-in-india-my-time-in-niyamgiri/>

I’m not saying Adani’s Abbot Point project is illegal–the local government
has approved it–or that it won’t get the required financing from other
process. But there’s no guarantee, as yet, that it will get done either.
Anything is possible

*Adani’s Australian project gets $1 billion SBI loan (The Times of India)*

"The MoU with SBI is a significant milestone in the development of our
Carmichael mine," said Adani Group chairman Gautam Adani.

MUMBAI: Funding has started to fall in place for Gautam Adani's ambitious
$16.5-billion coal and mine development project in Australia, which has got
a new lease of life during Prime Minister Narendra Modi's tour of Australia.

An Australian regional government has agreed to part-fund the
infrastructure development part of the project, and India's largest lender
State Bank of India (SBI) has agreed to provide $1 billion, or Rs 6,100
crore, for the project, making it one of the largest extended facility by
an Indian bank for an overseas project.

The move comes at a point of time when global banks - including the likes
of Citigroup, Morgan Stanley, JP Morgan Chase, Goldman Sachs, Deutsche
Bank, Royal Bank of Scotland, Barclays, Credit Agricole and HSBC - have
decided to stay away from funding the project due to environmental reasons.

"The MoU with SBI is a significant milestone in the development of our
Carmichael mine," said Adani Group chairman Gautam Adani, who was in
Brisbane with a business delegation for the G20 summit, which Modi attended
over the weekend.

With SBI's billion-dollar funding and investments from the Queensland state
government, Gautam Adani
<http://timesofindia.indiatimes.com/topic/Gautam-Adani> is now banking on
Australia's big four banks - along with export credit agencies of Korea and
US - to achieve financial closure of his most ambitious project. Up to $1.5
billion is expected to be raised from South Korea's export credit agency
alone. This is because the Adani Group has awarded a $2-billion contract to
Korean company Posco to construct the 388km railway line to connect the
Carmichael mine to Abbot Point.

Prime Minister Modi met Queensland premier Campbell Newman in Brisbane,
leading to a commitment from the Queensland state government to take
short-term, minority stakes in Adani Group's rail and port infrastructure
projects. "We are prepared to invest in core, common-user infrastructure.
We want a new (Galilee) coal basin to open. The role of government is to
make targeted investments to get something going and exit in a few years'
time," Newman said.

Tim Buckley, director of Energy Resource Studies Australasia at the
Institute for Energy Economics and Financial Analysis (IEEFA), said, "This
project is not commercially viable. Eight of the largest global financiers
have already said they won't provide financing to the Galilee projects.
This makes a mockery of the plan by Adani to export two-thirds of the
Carmichael coal back to India. His own energy minister is making it clear
India can't afford to solve energy poverty using hugely expensive imported
coal."

Last week, coal minister Piyush Goyal said he plans for India to cease
importing thermal coal within two-three years.

[Goanet] Indian Billionaire Gautam Adani Finds A Savior In The Modi Govt (Forbes)

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