Despite being caught in the crosswinds of the recent Hindenburg report, the Adani Group won a government auction of four coal blocks at among the lowest prices in March. One of its blocks in north-west of Madheri, Maharashtra saw only one competitor, Cavill Mining Private.

An investigation by has found that Utkarsh Shah, the owner of Cavill, is also the promoter of Adicorp Enterprises. The latter firm has been alleged of channelling funds between Adani companies to evade mandatory party disclosures. Scroll’s findings reveal that Adicorp and Cavill share the same registered address in Ahmedabad, Gujrat, further linking the two organisations. 

Incorporated in 2022 with a paid-up capital of $121.97 (INR100,000) and no mining experience, Cavill competed with an Adani subsidiary for mining rights in the block. 

The relationship between the companies is important considering India’s auction rules. Had Adani been the sole bidder for the block, the coal auction would have been annulled; Cavill’s participation ensured that the auction for block went through. 

In 2015, the Comptroller and Auditor General of India had flagged concerns about subsidiaries and joint ventures placing bids for the same block. The coal ministry thereafter introduced rules to count bids by subsidiaries and joint ventures as a single bid. 

In 2020, The Ministry of Coal set up an expert committee that recommended an auction is invalid if there were less than three bidders for a block. In the following year, many mines did not attract even a single bidder, prompting the ministry to reduce the eligibility criteria from three to two. 

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However, concerns remain as to the legitimacy of many mining auctions. In the past, the Indian Audit and Accounts Department has raised concerns about bidders coming together to eliminate competition and affecting prices, calling it a form of ”cartel conduct”

Uncompetitive bidding

In November 2022, the government offered mining licences in 141 blocks across 11 states, the biggest auction held for coal projects. However, the auction received shallow competition with only 59 companies placing 96 bids for 36 mines, averaging to less than three bids per mine. The auction ended with only 29 mines being successfully bid. 

The Adani Group faced only one bidder in three of the flour blocks it won. Cavill competed against Adani in two blocks, one in Gondbahera Ujheni, that also saw a bid by a state company, and another which was won by MH Natural Resources, a wholly owned subsidiary of the Adani Group. 

The owner of Cavill also owned 96% of the shares of Adicorp, the firm linked to the Hindenburg allegations. After owner Utkarsh Shah’s death, his son Adarsh Shah replaced him as the director in both Cavill and Adicorp, further making clear the companies’ closeness.

According to the Hindenburg research, Adicorp was involved in a series of transactions with other Adani Group companies. Between 2019 and 2020, the Adani Group’s companies lent $75.8m (INR622) to Adicorp, which used that money to extend a loan of $ 60.8m (INR608.4) to Adani Power in the same financial year.

The Hindenburg report flagged that the Adani Group used Adicorp to transfer funds within the companies and circumvent market disclosures. However, in response to the Hindenburg claims, the Adani Group maintained “Adicorp is not a related party.”