The stock of Adani Enterprises, a conglomerate with interests in coal mining, trading, power generation and ports, has plunged by more than half in the past year.

Much of this decline was after the Lokayuktha's report accusing Adani Enterprises of involvement in Karnataka's mining scam. Even though the company denied any such involvement, its corporate governance took a hit.

The stock also corrected due to a multitude of factors such as high interest costs, exchange losses and a softening in merchant tariffs of its power subsidiary.

Plus, the Indonesian Government, by not allowing sale of coal below notified price (close to market prices), may hit Adani's profitability. Adani has signed a fuel supply agreement with Adani Power at a landed cost which is far lower than notified prices. There are also indications of an export tax hike by Indonesia.

The company will further suffer from a mining resource rent tax introduced by the Australian Government as it made huge investments in exploration of the Carmichael coal mine.

For the nine months ended December 2011, the consolidated profits marginally declined year-on-year in spite of a 66 per cent jump in revenues. A sharp rise in interest rate and depreciation, especially from power assets, led to the poor show. Adani Power, a 70 per cent subsidiary, witnessed a sharp decline in the profits for the nine months ended December 2011.

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