Corporate Restructuring A Case Study of PDF

IRJMSH Vol 7 Issue 1 [Year 2016] ISSN 2277 – 9809 (0nline) 2348–9359 (Print)
Corporate Restructuring: A Case Study of Adani Enterprises, India
Dr. Nidhi Bansal

Asstt. Professor, Institute of M anagement Studies, Ghaziabad
E-M ail: drnidhibansal9@gmail.com
Mr. Saurabh Bansal

DGM (Finance & Accounts), Shipra Estate Ltd., Ghaziabad
E-M ail: saurabhbansal786@yahoo.com
Abstract:
Corporate Restructuring has become a major component in the financial and economic
environment all over the world. It is the process of redesigning one or more aspects of a
company. The process of reorganizing a company may be implemented due to a number of
different factors, like positioning the company to be more competitive, survive a currently
adverse economic climate, or poise the corporation to move in an entirely new direction and
many more. Corporate restructuring is needed to counter challenges in competitive business
environment. Most of the organizations carry out corporate restructuring as per the needs of the
business. Some do it through mergers, acquisitions, and some by demergers as well; while some
others make structural changes and carry out resource optimization in the organization. During
the past decade, corporate restructuring has increasingly become a staple of business and a
common phenomenon around the world. Unprecedented number of companies across the world
have reorganized their divisions, restructured their assets and streamlined their operations in a
bid to spur the company performance. Corporate Restructuring generally includes a diverse array
of company actions, from selling business lines to acquiring new business lines, from
downsizing workforces to the addition of new business units and from stock repurchase to debt
elimination. It has enabled numerous organizations to respond quickly and more effectively to
new opportunities and unexpected pressures so as to re-establish their competitive advantage.
This paper analyzes the corporate restructuring of Adani Enterprise’s, announced at the start of
2015 and approved by the board and shareholders in April 2015.
Keywords : Corporate Restructuring, Challenges, Merger, Demerger
Introduction
With rapid advances in information technology and acute resources constraints across the globe, the
business world has become more complex and fluid in recent times. To survive and compete the
present day organizations should do away with their existing culture, policies, structure and start with
a clean sheet. They have to put more emphasis on the business process as a whole and do everything
to keep the smile on the customer’s face. Corporate restructuring implies activities related to
expansion or contraction of operations or changes in its assets or financial or ownership structure
The Indian business environment has altered thoroughly since 1991 with the changes in
the economic policies and introduction of new institutional mechanism. The Indian corporate
world, while be appropriate from decontrol, and deregulation, has now begun to feel the effect of
these changes. Those most affected are the promoters who are today threatened by the possibility
International Research Journal of Management Sociology & Humanity ( IRJMSH ) Page 108
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of hostile takeovers. At the same time, financial institutions, which have a significant stake in
many companies, have started demanding better corporate governance.
Changes in the business environment ensuing from liberalization and globalization have
contributed to dynamism in the Indian economy. The new environment creates challenges to the
methods of operations practiced under the controlled economy. These challenges have compiled
Indian business to rethink the ways in which they previously operated. With growth becoming
central to the new economic environment, mergers and acquisitions are gaining acceptance as a
mode of growth in India. This new environment demands more stringently, than the controlled
economy did, that the business either perish or restructure through amalgamations and takeovers.
As a result, Indian companies have been gradually restructuring themselves through
amalgamations, divestitures, Leveraged buyouts (LBO’s), sell-offs, spin-offs etc., especially,
post liberalization. The corporate world today is witnessing a sudden surge of M&As sweeping
across all the industries, which has totally restructured the Indian corporate environment. This
paper tries to Study and Analyze Corporate Restructuring with reference to Adani Enterprises,
India.
Review of Literature
Laura Horn (2012) have emphasized on the essentially political nature of corporate governance
regulation and argues that the transformation of corporate governance regulation is part of a
broader political project of economic restructuring and market-making in the EU and illustrated
that how company law has become increasingly focused on the rights of shareholders, while
worker rights have been relegated to the area of social policies and labor law. Desai; Klock; &
Mansi (2011) have examined the role played by the parent's motive in undertaking a carve-out
and found that the post-IPO parent ownership significantly affects the acquisition likelihood and
the level of acquisition premium. Zahid & Shah (2011) have stated that businesses from
developing countries have started to buy out businesses of developed countries as their
economies are doing better compared to the developed world due to low cost of production.
Indian and Chinese businessmen are the most aggressive compared to rest in this regard.
Owolabi & Dada (2011) has examined the role, nature, composition, objectives and functions of
an effective audit committee in achieving reliable corporate governance and suggested that the
recent business and governance failures demonstrated that a great step in corporate governance
restructuring is a must.
Dhiraj Sharma (2007) analyzed the state electricity boards in India from efficiency
perspective and emphasized that power has become a concurrent subject with State governments
managing the Electricity Boards. The SEBs was performing well till the mid 1980s both in
technical and financial aspects. From then most of the SEBs started showing losses and had no
resources to add capacity. Power sector slipped into a crisis with deteriorating performance, high
losses and low credibility. D. Parameswara Sharma, P. S. Chandramohanan Nair and R.
Balasubramanian (2006) studied Performance of Indian power sector during a decade under
restructuring: a critique. They analysed economic performance, technical performance, private
sector participation and performance of reformed states. Murlidharan K Iyer, (2005) examined
reforms and plan for restructuring GEB. The study attempted to trace the history of reforms in
India and restructuring of GEB in particular. It emphasizes on unbundling exercise and its
significance, process involved.
Objectives of the Study
1. To Study the diverse issues associated to the procedure of Corporate Restructuring.
2. To comprehend the general framework of Corporate Restructuring and reformation.
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3. To analyze how Corporate Restructuring can be used as a tool of Competitive Advantage.

4. To Study and Analyze Corporate Restructuring with reference to Adani Enterprises,
India.
For the purpose, secondary data has been used.
Corporate Restructuring
A bonus for Competitive Advantage Crum and Goldberg define restructuring of a company as “a
set of discrete significant measures taken in order to boost the competitiveness of the enterprise
and thereby to augment its value.” It generally includes a array of company actions, from selling
business lines to attaining new business lines, from rationalizing workforces to stock repurchase
to debt elimination. Conceptual Scaffold for corporate restructuring and reorganization consists
of the following:
1. Management of Assets.
2. Constructing new Ownership Relationships.
3. Reorganizing financial claims.
4. Corporate Strategies.
It has facilitated several organizations to react swiftly and more efficiently to novel
opportunities and unanticipated pressures so as to re-establish their competitive advantage. The
suppliers, customers and competitors also have an equally insightful impact while working with
a reorganized company. In India, corporate houses have recently witnessed an increase of
restructuring in different organizations.
Corporate restructuring, thus involves destroying old paradigms, old technology, old ways
of doing things and starting all over afresh.
Reasons for Restructuring

1. Globalization of business caused restructuring, because in this era only the lowest cost
producers can survive.
2. Change in fiscal and government polices like deregulation/decontrol has led many
companies to go for newer markets
3. Information technology motivates many companies to adopt new technology for
technological advancement of the company.
4. Quality enhancement and cost reduction has necessitated downsizing of work force both
at work and managerial levels.
5. Economic value of currency and foreign exchange rate implications
6. Focus on core business and to develop synergies has established restructured corporate.
7. To minimize the risk through diversification is also one of the reasons for corporate
restructuring.
8. To write off loss and integration of sick unit into successful organization companies also
go for restructuring.
9. The restructuring process will facilitates to have horizontal and vertical integration,
thereby the competition is eliminated and the company can have access to regular raw
material.
Techniques of Restructuring
1. Merger
Merger is the combination of two or more companies which can be merged together either by
way of amalgamation or absorption. The combining of two or more companies, is generally by
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offering the stockholders of one company securities in the acquiring company in exchange for
the surrender of their stock. Mergers may be,
(i) Horizontal Merger: It is a merger of two or more companies that compete in the same
industry
(ii) Vertical Merger: It is a merger which takes place upon the combination of two companies
which are operating in the same industry but at different stages of production or distribution
system.
(iii) Co generic Merger: It is the type of merger, where two companies are in the same or
related industries but do not offer the same products, but related products and may share similar
distribution channels, providing synergies for the merger.
(iv)Conglome rate Merger: Conglomerate mergers are merger of different kinds of businesses
under one flagship company. The purpose of merger remains utilization of financial resources
enlarged debt capacity and also synergy of managerial functions.
2. Demerger
It is a form of corporate restructuring in which the entity's business operations are segregated
into one or more components. A demerger is often done to help each of t he segments operate
more smoothly, as they can focus on a more specific task after demerger.
3. Reverse Merger
Reverse merger is the opportunity for the unlisted companies to become public listed company,
without opting for Initial Public offer (IPO).In this process the private company acquires the
majority shares of public company, with its own name.
4. Disinvestment
Disinvestment means the action of an organization or government selling or liquidating an asset
or subsidiary. It is also known as "divestiture".
5. Takeover/Acquisition
Takeover means an acquirer takes over the control of the target company. It is also known as
acquisition. Normally this type of acquisition is undertaken to achieve market supremacy. It may
be friendly or hostile takeover.
(i)Friendly takeover: In this type, one company takes over the management of the target
company with the permission of the board.
(ii)Hostile takeover: In this type, one company takes over the management of the target
company without its knowledge and against the wish of their management.
6. Joint Venture (JV)
A joint venture is an entity formed by two or more companies to undertake financial activity
together. The parties agree to contribute equity to form a new entity and share the revenues,
expenses, and control of the company. It may be Project based joint venture or Functional based
joint venture.
Project based Joint venture: The joint venture entered into by the companies in order to
achieve a specific task is known as project based JV.
Functional based Joint venture: The joint venture entered into by the companies in order to
achieve mutual benefit is known as functional based JV.
7. Strategic Alliance
Any agreement between two or more parties to collaborate with each other, in order to achieve
certain objectives while continuing to remain independent organizations is called strategic
alliance.
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8. Franchising
Franchising may be defined as an arrangement where one party (franchiser) grants another party
(franchisee) the right to use trade name as well as certain business systems and process, to
produce and market goods or services according to certain specifications.
The franchisee usually pays a one-time franchisee fee plus a percentage of sales revenue as
royalty and gains.
9. Slump sale
Slump sale means the transfer of one or more undertaking as a result of the sale of lump sum
consideration without values being assigned to the individual assets and liabilities in such sales.
If a company sells or disposes of the whole or substantially the whole of its undertaking for a
predetermined lump sum consideration, then it results in a slump sale.
The restructuring process does not only involve strategic decision making based on the
market study, competitor analysis, forecasting of synergies on various respects, mutual benefits,
expected social impact etc, but also the technical and legal aspects such as valuation of
organizations involved in restructuring process, swap ratio of shares if any, legal and procedural
aspects with regulators such as Registrar of Companies, High Court etc., optimum tax benefits
after merger, human and cultural integration, stamp duty cost involved etc.
It involves a team of professionals including business experts, Company Secretaries, Chartered
Accountants, HR professionals, etc
The restructuring process can be divided into two broader parts as detailed below:
Hardware Restructuring
It involves redefining, dismantling, or modification of the existing structure of the organization.
The major areas are:
 Identification of core competency
 Flattening of organization layer
 Downsizing
 Creation of self directed teams
 Benchmarking
Software Restructuring
It involves cultural and process charges required to create the more collaborative environment
needed for the renewal and growth of the company.
 Communication
 Organizational Support
 Trust
 Stretch – liberating and energizing element of managerial context
 Empowering people
 Industry Foresight
 Training
Companies Act, 2013
The Companies Act, 2013 has brought many enabling provisions with regard to mergers,
compromise or arrangements, especially with respect to cross border mergers, time bound and
single window clearances, enhanced disclosures, disclosures to various regulators, simplified
procedure for smaller companies etc. It may be noted that Section 230-240 of the Companies
Act, 2013 and the rules made there under are yet to be notified.
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Salient Features of Companies Act, 2013 relating to Corporate Restructuring

(Section 230-240)
National Company Law Tribunal to assume jurisdiction of High Court
Section 230(2) – Application for compromise or arrangement to be accompanied by an affidavit,
disclosing:
1. All material facts relating to the company.
2. Reduction of capital if any included in the compromise or arrangement;
3. Any scheme of corporate debt restructuring consented to by not less than 75% of the secured
creditors in value along with creditors responsibility statement, report of the auditor as to the
funds requirement after CDR and the conformity to liquidity test etc.
Proviso to Section 230(3) – Notice relating to compromise or arrangement and other documents
to be placed on the website of the company.
Section 230(5) – Notice of meeting for approval of the scheme of compromise or arrangement
be sent to various regulators including:
1. The Central Government;
2. Income-tax Authorities;
3. Reserve Bank of India (`RBI’);
4. Securities Exchange Board of India (`SEBI’);
5. The Registrar;
6. Respective Stock Exchange;
8. The Competition Commission of India; if necessary; and
9. Other Sectoral regulators which could likely be affected by the scheme. Representation, if any,
by the above authorities will have to be made within a period of 30 days from receipt of notice.
Proviso to Section 230(4) – Persons holding not less than 10% of the shareholdings or persons
having outstanding debt amounting to not less than 5% of the total outstanding debt as per the
latest audited financial statement, entitled to object the scheme of compromise or arrangement.
Proviso to Section 230(7) – No sanction for Compromise or arrangement if accounting
treatment has no AS compliant.
Section 234 – Cross border Merger permitted. The 1956 act permits merger of foreign company
with Indian company and not vice versa.
Section 233 (10) – Abolishing the practice of companies holding their own shares through a trust
(Treasury Stock) in case of merger of holding and subsidiary companies. Ultimately the shares
are to be cancelled.
Section 233 – Fast track mergers introduced. – The new Act enables fast track merger without
the approval of NCLT, between:
1. Two or more small companies. Small company is defined under the Act.
2. Holding and wholly owned subsidiary company
3. Other class of companies as may be prescribed
Section 230(6) – Approval of scheme by postal ballot thereby involving wider participation;
Section 230(11) – Any compromise or arrangement may also include takeover offer made in
prescribed manner. In case of listed companies, takeover offer shall be as per the regulations
framed by SEBI.
Corporate Restructuring - A Case of Adani Enterprises
The case provides an overview of the Adani Enterprises, corporate restructuring which was
announced at the start of 2015. Adani Enterprises proposed a scheme of arrangement (Scheme)
for the demerger of its two subsidiaries, Adani Ports and Adani Power.
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The Government of India (GoI) is pursuing a radical transformation of the Indian coal
mining, renewable energy, power generation and electricity distribution sectors. Energy Minister
Piyush Goyal has set extremely ambitious targets in regard to increasing Indian energy supply,
including 175 gigawatts (GW) of additional renewable energy installation by 2022, a US$50
billion (bn) modernization and expansion of the electricity grid and a possible trebling of India’s
domestic coal production to 1,500 million tonnes per annum (Mtpa).
The Adani Group strategy is moving to better align with the GoI’s new policy. The Adani
Group’s rapid expansion plans into solar module manufacturing, solar project installation,
domestic Indian coal mining and grid transmission are entirely consistent with the GoI electricity
transformation.
Energy Minister Goyal seeks to build India’s energy security through system diversity utilizing
domestic resources. Energy Minister Goyal has also made it clear that India’s reliance on
thermal coal imports is not sustainable for the economy, nor commercially viable for the coal-
fired power plants involved.
IEEFA views Adani Enterprise’s Galilee coal mine, rail and port proposal as a stranded
asset, left financially unviable by the structural changes in both the Indian electricity market and
the global seaborne thermal coal sector, in a pattern similar to a number of other Indian
companies with failed overseas coal expansions since 2010. This Scheme further marginalizes
the Carmichael proposal.
Figure 1: Adani Group Simplified Corporate Structure – 2015 (Pre Restructuring)
Adani
Family
75%
Mkt Cap: US$ 11,766m

Adani Enterpri se s Ltd.
6%
69% 75%
Mkt Cap: US$10,436m

Mkt Cap: US$ 1,960m Adani Ports & S EZ Ltd
Adani Power Ltd.
Ltd
100%
Adani Mining P/L

Adani Transmission Adani Abbot Point
(Australia)
P/L Terminal (Australia) P/L
(Australia)
Unlisted Promoter Family Group P/L
(Australia)
Listed Entity
Unlisted Subsidiary and domicile (if not India)
Source: Adani Enterprises 2014 Annual Report, Adani Restructuring notice to BSE (30/1/15), IEEFA estimates.
Note: Only selected major subsidiaries are presented in this simplified corporate structure. Market capitalization of
equity calculations are as at 30 April, 2015; for more detail please refer Figures 6 & 7.
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Figure 2: Adani Group Simplified Corporate Structure – 2015 (Post Restructuring)
Atulya Resources
Adani Ltd
Family 100%
(Ca yman Islands)
58% 75% 56%
Mkt Cap: US$1,958m Mkt Cap: US$2,539m Mkt Cap: US$10,436m Mkt Cap: US$50m
Adani Power Ltd Adani Adani Ports & SEZ Adani
Enterprises Ltd Ltd Transmission Ltd
100% 100%
Adani Mining P/L

(Australia) Adani Abbot Point
Terminal P/L
Unlisted P romoter Fa mily Group (Australia)
Listed Entity
Unlisted Subsidiary and domicile (if not India )
Source: Adani Enterprises 2014 Annual Report, Adani Restructuring notice to BSE (30/1/15), IEEFA estimates
Note: Adani Enterprises shareholders voted 100% in favor of this Scheme on April 20, 2015. The Scheme is effective
as of April 1, 2015, but completion is not due till the end of 2015.
Asset Transfers
As part of the Scheme, the Adani Group is clearing up the corporate structure to fully align with
the specific areas of focus for each of the four distinct listed groups. Assets transfers include:
 40MW Solar: This Gujarat solar farm will be transferred from Adani Enterprises to
Adani Power for an agreed 64m Adani Power shares worth Rs3.2bn (US$50m) at
Rs50ps.
 Belekeri Port: This port will be transferred from Adani Enterprises to Adani Ports for
0.9m Adani Ports shares worth Rs276m (US$4m) at the current share price of Rs307 per
share (ps).
 Adani Transmission (India): This transmission unit is being transferred from Adani
Power to Adani Enterprises in return for new Adani Power shares, prior to its in specie
distribution to all Adani Enterprise shareholders. Adani Transmissions has over 5,000
circuit km of transmission lines across India. Management reports this unit has an
enterprise value of Rs110bn (US$1.8bn), the transfer of a 90.9% equity stake from Adani
Power to Adani Enterprises was done at an agreed equity value of Rs3.2bn (US$50m)
implying a heavy level of financial leverage.
The Adani Group Boards have approved the Scheme and recommended it to shareholders, who
voted overwhelmingly in favour in April 2015.
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Net debt
Adani Enterprises has consolidated net debt of US$10.9bn as at September 2014, plus the
US$2bn of net debt in AAPCT. Net debt will rise to US$14bn post the acquisition of the Udupi
Power Station in 2015, everything else being equal.
Figure 3: The Adani Group Net Debt by listed Entity
Adani Group: Net Debt By Listed Entity
US$ m FY2013 FY2014 1 H FY2015
Net Debt in AEL--‐ consolidated 10,055 10,222 10,889
Net Debt in Adani Power 6,587 6,498 6,582
Net Debt in Adani Ports 1,639 1,444 2,182
Net Debt in AEL ex listed units 1,830 2,279 2,125
Source: Adani Enterprises, Adani Ports and Adani Power annual 2013/14 and interim 2014/15 accounts
The purpose of the Adani Enterprises restructuring is to deconsolidate/separate out the operations
of Adani Ports and Adani Power as free standing listed groups. Post deconsolidation, Adani Ports
will continue to have net debt of US$2.2bn (US$4.2bn if the AAPCT T1 divestiture is not
completed). Adani Power will have an estimated net debt of US$5.8bn after deconsolidating
Adani Transmissions and acquiring the Udupi power plant (refer section 3.6). Adani Enterprises
will have net debt of an estimated US$2.1bn post deconsolidation.
Adani Enterprises - Post Restructuring
Market value of equity and free float
Adani Enterprises free float will remain at the current level of 25.0%. Howe ver, Adani
Enterprises market capitalization of equity is currently at US$11.8bn, but will decline to an
estimated US$2.5bn post deconsolidation (subject to change as the sha re prices across the group
change). Adani Power currently has a market capitalization of equity of US$2.0bn, which will
remain unchanged post the Scheme, while the free float will rise from 25.0% to 41.9%.
The market capitalization of Adani Ports is currently US$10.4bn with a free float of only 25.0%.
Post the scheme, the market capitalization will remain as is, but the free float will rise to 43.8%.
Figure 4: The Adani Group Issued capital and cross-shareholdings (end 2014)
AEL Adani Power Adani Ports Adani Transmission
Adani Family 824.9 75.0% 172.3 6.0% 0.0 0.0% 0.0 0.0%
Adani Enterprises Ltd n.a. n.a. 1,981.6 69.0% 1,552.5 75.0% 1,099.8 100.0%
Public 275.0 25.0% 718.0 25.0% 517.5 25.0% 0.0 0.0%
Total Shares (m) 1,099.8 2,871.9 2,070.1 1,099.8

Source: Adani Enterprises, Adani Ports and Adani Power annual 2013/14 and interim 2014/15 accounts
Figure 5: The estimated Adani Group Issued capital and cross -shareholdings (post Scheme)
AEL Adani Power Adani Ports Adani Transmission
Adani Family 824.9 75.0% 1,706.5 58.1% 1,164.4 56.3% 824.9 75.0%
Adani Enterprises Ltd n.a. n.a. 0.0 0.0% 0.0 0.0% 0.0 0.0%
Public 274.9 25.0% 1,229.4 41.9% 905.6 43.8% 274.9 25.0%
Total Shares (m) 1,099.8 2,935.9 2,070.1 1,099.8
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Share price (Rs) Rs674 Rs43 Rs318

M arket Capitalisation
Pre distribution (Rsm) Rs741,265 m Rs126,098 m Rs657,448 m
Pre distribution (US$m) $11,766 m $2,002 m $10,436 m
Post distribution (Rs m) Rs159,951 m Rs126,098 m Rs657,448 m Rs3,120 m
Post distribution (US$m) $2,539 m $2,002 m $10,436 m $50 m
Source: IEEFA estimates
Adani Enterprises post deconsolidation

Post restructuring, Adani Enterprises will become a separate company with an equity
capitalization of US$2.5bn (as implied by the 30 April 2015 share prices of the three listed
groups). Against this will be an estimated US$2.1bn of net debt (or higher) is transferred out of
Adani Transmissions prior to its initial public offering (IPO).
It will operate a trading division, with revenues of US$5.5bn, and EBIT averaging of
US$190m in the last three years. Additionally there is an Agro products division with revenues
of US$1.7bn and EBIT averaging US$25m in the last three years. There is also a gas distribution
unit. The Carmichael coal mine proposal and the 3-4Mtpa Indonesian coal mine are the only
other substantial business units within Adani Enterprises. The Abbot Point port project proposal
for Terminal 0 is held by the unlisted Adani family group.
Adani Enterprises has also been named as the vehicle that will undertake the two new
proposed expansions into solar. An 80% reduction in market capitalization will reduce Adani
Enterprises’ debt-borrowing capacity by an appropriate amount.
Adani Power
Adani Power’s issued capital is unaffected by the Scheme so its market capitalization of equity
will remain unchanged at US$2.0bn post scheme completion (subject to future share price
moves). Against this, Adani Power will have US$6.6bn of net debt, rising by US$1.0bn to
US$7.6bn post completion of the 1.2GW Udupi coal- fired power station acquisition from Lanco
Infratech. The transfer of the 40MW solar project from Adani Enterprises to Adani Power is
being funded by the issues of new shares of an estimated US$50m (64m shares at Rs50ps).
Adani’s move into electricity transmission

The January 2015 Scheme announcement will see a new listed company, Adani
Transmissions Ltd, own the Adani Group’s electricity transmission assets, stated to already
exceed 5,000 circuit km of transmission lines across India. As of March 2014, three transmission
lines are operational, including:
1. The 500kv 990km line from Mundra, Gujarat, to Mohindergarh, Haryana.
2. The 400kv 434km line from Mundra, Gujarat, to Dehgam, Gujarat.
3. The 400kv 434km line from Tiroda, Maharashtra, to Warora, Maharashtra.
Adani Enterprises’ move into solar

Adani Enterprises announced in early 2015 a major new business initiative involving a rapid
investment in solar, involving two new business streams:
1. The proposed US$4bn solar manufacturing joint venture with Sun Edison.
2. A proposed 10GW solar park in Rajasthan in joint venture with the Rajasthan government.
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Adani Group’s Expansions

Beyond the A$17bn (US$13bn) Carmichael and Abbot Point Port projects in Queensland,
Australia, Adani Group has numerous other major expansions under way. Following on from the
Adani Ports’ acquisition of the Dhamra port in Odisha for US$0.9bn in June 2014, details on
other expansions include:
1. A multibillion dollar capex program to expand the Dhamra port from its 14Mt of
throughput in 2013/14 to a target of 100Mtpa capacity by 2020.
2. Adani Ports February 2015 commissioning of a 20Mtpa bulk terminal at Tuna Tekra,
Kandla Port.
3. Adani Ports won a concession in February 2014 to develop a new US$0.2bn Container
handling Terminal at Ennore Port in Tamil Nadu, with US$1.2bn capex plans to expand
to 80Mtpa.
4. Adani Ports is said to be talking about acquiring operating port assets of Esser Ports Ltd,
one of the largest listed port owners in India.
5. Adani Ports is developing a Special Economic Zone Industrial Park at Mundra.
6. Adani Enterprises aims to lift production from 2-4Mtpa to 11Mtpa at its Bunyu Island,
Indonesia coal mine.
7. Adani Enterprises has multiple tender bids outstanding for domestic Indian coal deposits
to vertically integrate Adani Power’s coal- fired power plants, although to date the group
has only secured a single deposit in Jharkhand with a potential 2.5Mtpa capac ity.
8. Adani Enterprises has proposed a US$11bn, 10GW Rajasthan Solar Park Joint Venture.
9. Adani Enterprises has proposed a US$4bn Gujarat Solar Manufacturing Joint Venture.
10. 10. Adani Power in August 2014 made a US$1bn bid to acquire Lanco Infratech’s
1,200MW Udupi imported-coal fired power plant (this transaction was closed April
2015).
11. Adani Power in November 2014 entered a binding agreement to acquire the 600MW coal
fired Korba West power plant in Chhattisgarh from Avantha Group for US$0.7bn.
12. Adani Power was reported in March 2015 to be aiming to buy Adhunik Power in a deal
valued at 3500-4000 Crore (US$0.5-0.6bn). Adani denied any deal has been done.18)
13. Adani Power is due to commission the fifth 660MW coal fired supercritical power plant
unit at Tiroda during the June 2015 quarter.
14. The Adani Group in March 2015 proposed a US$3bn Sindri coal-based substitute natural
gasplant and associated 1.5Mtpa urea plant and 400MW captive power plant.
15. Adani Transmissions is reported to be one of three private Indian firms set to bid on a
tender for the estimated Rs6,000 crore (US$1bn) Gadarwara A&B transmission line
development, runby the wholly owned subsidiary of the Ministry of Power, the Rural
Electrification Corporation.
The Adani Group is financially and operationally leveraged to the expansion of a multitude of
sectors across the Indian economy. Numerous new projects are under way. Some will be viable
and will proceed, others will see regulatory, market and financing changes that leave the
proposals un- commercial.
Adani Ports and Adani Power Share performance
Adani Ports has significantly outperformed the BSE over the past 12 months, having doubled in
price relative to the 40% rise in the BSE.
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Figure 6: Adani Ports & SEZ share price relative to NSE over the last four years (Rs)
Source: Yahoo Finance
Figure 7: Adani Powe r share price relative to NSE over the last four years (Rs)
Source: Yahoo Finance
Structural Decline of Seaborne Thermal Coal

Seaborne thermal coal demand will decline from its 2013 peak of almost 1,000Mt to below a
850Mtpa level over 2020-2025. Figure C1 details the 50% decline in coal prices since 2011.
The key driver of this forecast is that China represents 50% of world coal consumption, and in
2014 China’s coal consumption declined by 2.9%. China rapidly moved to protect its domestic
coal mining operations, resulting in an 11% decline to 290Mt in coal imports in 2014 (of which
224Mt was thermal). The decline in China’s seaborne coal imports has accelerated to-date in
2015. First quarter 2015 coal consumption was down 4.7% year-on- year (yoy) in China, with
coal imports down a staggering 42% yoy. Declining coal consumption reflects economic
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transition towards less electricity intensive sectors, greater energy efficiency and a rapid
diversification of electricity generation. Considerably more hydro, gas, nuclear, wind and solar
capacity has been installed than coal- fired power plants in the last three years, and this trend is
accelerating. A structural transition is in progress.
India imported close to 200Mt of coal in 2014/15 (this includes coking and thermal coal
imports), up 18% yoy. While many commodity forecasters have assumed Indian imports will
continue to grow, rising to upwards of 400Mt in the next decade, IEEFA forecasts a peak in
Indian thermal coal imports in 2015/16, with a rapid ~20% pa decline thereafter. This is
directionally consistent, but more conservative, than Energy Minister Goyal’s aim for zero
thermal coal imports by around 2017.
Figure 9: Thermal Coal Export Price - Newcastle 6,000kcal NAR US$/t

\
Source: Index Mundi, Australian thermal coal Monthly Price - US Dollars per Metric Tonne
Conclusion and Suggestions

The results from the study reveal that there can be significant change in profitability post
restructuring program. Most of the companies have responded favorably to post corporate
restructuring process. It was also found that CRP in some companies did not help in revive their
position. Whereas in certain other situations it was found that the CRP helped the firms to in a
positive way by way of increasing their profitability margin. Hence restructuring program should
be undertaken in case a company faces problems but the restructuring should be done in
systematic manner. Companies at primary route level should identify the problems and
accordingly plan for restructuring.
Corporate restructuring on a large scale is potentially one of the most challenging tasks
faced by economic policymakers. The need for large-scale restructuring arises in the aftermath of
a financial crisis when corporate distress is pervasive. The successful completion of restructuring
requires a government to take the lead in establishing restructuring priorities, addressing market
failures, reforming the legal and tax systems, and, perhaps most important, dealing with
obstructions posed by powerful interest groups.
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Some general suggestions regarding large-scale corporate restructuring that can be drawn
from the experience of the countries are as follows:
 Governments should be prepared to take on a large role as soon as a crisis is judged to be
systemic.
 A sound supporting macroeconomic and legal environment is essential.
 Measures should be taken quickly to offset the social costs of crisis and restructuring.
 Restructuring should be based on a holistic and transparent strategy encompassing corporate
and financial restructuring.
 Restructuring goals should be stated at the outset, and sunset provisions embedded into the
enabling legislation for new restructuring institutions based on these goals.
 A determined effort to establish effective bankruptcy procedures in the face of pressures from
vested interest groups is essential.
 The government should pare back its role in the economy after achieving its restructuring
goals in order to set the stage for higher growth in the long run.
 Large-scale post-crisis corporate restructuring takes a minimum of five years to complete, on
average.
 Finally, crisis can ultimately boost long-term growth prospects both by weakening special
interests that had previously blocked change, and through the successful completion of
corporate restructuring.
References
1. Chintal A. Desai; Mark S. Klock; Sattar A. Mansi (2011), On the Acquisition of Equity carve -
outs, Journal of Banking & Finance, Vol.: 35, No.: 12, December 2011, pp. 3432-3449
2. Corporate Restructuring, Valuations and Insolvency, The Institute of Companies Secretaries of
India.
3. Canon in India Restructuring to Survive - Business Strategy Case Studies Case Study in
Business, Management.htm
4. Corporate restructuring boon for competitive advantage _ company overview report
entrepreneur.com.html
5. Laura Horn (2012), Corporate Governance in Crisis? The Politics of EU Corporate Governance
Regulation, European Law Journal, Vol.18, No. 1, Jan 2012, pp. 83-107
6. Mark R. Stone , “Corporate Sector Restructuring, The Role of Government in Times of Crisis ”
International Monetary Fund, (June 2002 )
7. Nauman Zahid; Asif Mujtaba Shah (2011), Mergers and Acquisitions in International Business,
European Scientific Journal, Vol.: 22, August 2011, pp. 43
8. Owolabi; S. A. ; Dada; S. O (2011), Audit Committee: an Instrument of Effective Corporate
Governance, European Journal of Economics, Finance and Administrative Sciences, No.: 35, pp.
173-183
9. Tim Buckley, Director of Energy Finance Studies, Australasia, “An overview of Adani
Enterprises’
10. Corporate Restructuring”A report of Institute of Energy economics and financial Analysis, (May
2015)
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IRJMSH Vol 7 Issue 1 [Year 2016] ISSN 2277 – 9809 (0nline) 2348–9359 (Print)

Corporate Restructuring: A Case Study of Adani Enterprises, India

Dr. Nidhi Bansal

Mr. Saurabh Bansal

3. To analyze how Corporate Restructuring can be used as a tool of Competitive Advantage.

Reasons for Restructuring

Salient Features of Companies Act, 2013 relating to Corporate Restructuring

Mkt Cap: US$ 11,766m

Mkt Cap: US$10,436m

Adani Mining P/L

Unlisted Subsidiary and domicile (if not India)

Figure 2: Adani Group Simplified Corporate Structure – 2015 (Post Restructuring)

58% 75% 56%

Adani Mining P/L

Unlisted Subsidiary and domicile (if not India )

Total Shares (m) 1,099.8 2,871.9 2,070.1 1,099.8

AEL Adani Power Adani Ports Adani Transmission

Total Shares (m) 1,099.8 2,935.9 2,070.1 1,099.8

Share price (Rs) Rs674 Rs43 Rs318

Adani Enterprises post deconsolidation

Adani’s move into electricity transmission

Adani Enterprises’ move into solar

Adani Group’s Expansions

Source: Yahoo Finance

Source: Yahoo Finance

Structural Decline of Seaborne Thermal Coal

Figure 9: Thermal Coal Export Price - Newcastle 6,000kcal NAR US$/t

Conclusion and Suggestions

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