Adani group leads losers pack

Adani group stocks are amongst the major losers on the BSE today. Adani Power which had hit a upper circuit o Friday, leads the pack with a loss of almost 3% at Rs.31 levels, followed by Adani Enterprises  and Adani Transmission.

Two reasons – the market is not happy with the decision of Adani Power announcing its decision to transfer the 4,620-megawatt power plant in Mundra to its newly created subsidiary for an equity value of Rs 106 crore.  This is against the investment of nearly Rs.6000 crore it has already made in the project so far. Post this move, if approved by the shareholder, Adani Power with be the holding company for the group’s power assets.

The project will be transferred on a slump-sale basis to the new company, which will issue 10.6 crore shares of a face value Rs.10 each, giving it an equity value of Rs 106 crore. Though the company has called this is mere “internal transfer” to have no bearing on shareholders of Adani Power, the fact that it valuing itself at Rs.106 crore has spooked the market.

The second news is that Queensland’s government in Australia has said that it is still negotiating with Adani over the details of its royalties agreement for its $16.5bn Carmichael mine, despite the deal being officially agreed months ago.

The news is that Adani might have to cough up at least $5m in royalties in the Carmichael mine’s first year of production, a discount that fell each year until full royalties were due in five years’ time. As against this, Adani had said that it will pay only $2m in the first year.