New Delhi: An investigative report has found that Adani Group won a coal mine in auction in March where the only bidder was a company linked to the group.Scroll.in reported that out of the four coal blocks Adani Group won in March, one of the blocks it won, namely North West of Madheri, saw only one other bidder, Cavill Mining Private Limited.Note that the group won the mines at “among the lowest prices”, per the report.Related party allegationsCavill Mining Private Limited is also the main promoter of Adicorp Enterprises, Scroll.in reported. Hindenburg Research alleged that “Adicorp has simply been used to route funds from various Adani Group companies to publicly listed Adani Power.”It further alleged that four Adani Group companies lent Adicorp a total of Rs 620 crore ($87.4 million) in 2020. However, the US-based short seller said it found no disclosure of these transactions in the financial statements of the Adani Group lenders, several of which are publicly listed.It added that the loans seem “financially ill-advised” as it would take the firm [Adicorp] around 900 years to earn enough to pay back the loans back to Adani even without interest.Then, in the same financial year, Adicorp Enterprises loaned Rs 610 crore ($86 million) to Adani Power on an unsecured basis, Hindenburg Research alleged. “The loan to Adani Power represented about 98% of the funds it received from the four other Adani entities,” it alleged.Out of these four companies, two were the group’s listed firms, Adani Enterprises and Adani Ports and Special Economic Zone, Scroll.in reported.In response to this allegation, Adani Group had said, “AdiCorp is not a related party, and transactions with AdiCorp are not ‘related party transactions’ under laws of Indian or accounting standards and these have been undertaken in compliance with applicable law.”In addition, Mint reported in March that an accounting firm run by an independent director of Adani Power is the auditor for Adicorp Enterprises.Also read: SEBI Could Be Investigating Adani Dealings With Three Offshore Entities: ReportOther linksAccording to corporate filings, Adicorp and Cavill Mining share the same address in Ahmedabad.Utkarsh Shah is the promoter of both the companies. Shah, as per Gautam Adani: Reimagining Business in India and the World, is featured as a friend of Gautam Adani who is unable to compete with him in solving sudoku puzzles.Scroll.in reported he passed away last year, after which his son, Aadarsh, took over the reins of the firm.So, Aadarsh Utkarsh Shah is the director of both the companies – Adicorp and Cavill Mining.Adicorp was incorporated in February 23, 1995. Cavill Mining was incorporated 11 months ago, on April 25, 2022, according to OpenCorporates.Eighty percent of Cavill Mining’s paid-up capital of Rs 1 lakh came from Utkarsh Shah, making him the effective owner of the company, the report said, citing corporate filings. Utkarsh Shah also owned 96% of Adicorp shares, according to the firm’s 2022 corporate filings, it added.Moreover, the Economic Times, in 2013, had described him as Adani’s “friend of 30 years”.Interestingly, Cavill Mining was incorporated with no mining experience; however, it competed with an Adani subsidiary, MH Natural Resources Private Limited, for mining rights to the North West of Madheri block, Scroll.in found in its investigation.The block holds 200 million tonnes of coal in Maharashtra’s Chandrapur, the report added.Only two bidders in a coal mine auctionAnother interesting point is that Cavill Mining’s participation ensured the auction took place as there were only two bidders.According to the Union coal ministry’s rules, the auction for a commercial mine, on the first attempt, is valid only if there are at least two bidders.However, this wasn’t the case years ago.In 2015, the Comptroller and Auditor General (CAG) had flagged that out of the 29 coal mines successfully auctioned, at least 11 coal mines saw participation by the same company/parent subsidiary/coalition/joint venture.Therefore, to prevent a company from submitting multiple bids, which could to stifle competition in the final price offer, the coal ministry tightened the rules. From thereon bids by subsidiaries and joint ventures were counted as a single bid.However, in 2021, the rules were tweaked. Due to poor response, the ministry reduced the minimum number of qualified bidders required for an auction to take place from three to two.The October 2018 recommendations of the Pratyush Sinha committee said that “in case of less than three technically qualified bidders (TQBs), the first attempt of auction shall be annulled.” It added that “the bidding shall continue to the second round even in case the number of TQBs is less than three.” This was “on the lines of Mineral (Auction) Rules, as amended vide 2017 Rules notified by the Ministry of Mines,” according to a Lok Sabha reply as on February 5, 2020.Also read: Questions SEBI Needs to Ask Adani Group, Now That It Is Owning Up to Brother VinodMore mines put up for auction, but less number of biddersIn November 2022, the Union government offered 141 blocks across 11 states – the biggest auction so far for the key commodity, per the Hindu BusinessLine. However, many questioned the government’s rationale of auctioning a large number of mines at one go, Scroll.in reported.Sudiep Shrivastava, a lawyer and activist, told the news outlet, “You throw open 141 mines, knowing well that it will kill competition…Only a few blocks faced real competition.”He was a litigant in the Supreme Court case that resulted in the cancellation of captive coal blocks in 2014, the report added.So if there’s less competition, the companies could get the mines at the lowest price.Priyanshu Gupta, who teaches business sustainability at the Indian Institute of Management in Lucknow, shared with Scroll.in his analysis on the price data across several rounds of coal auctions. He analysed coal auctions till April 2022.His findings showed mines with two bidders were bid out at the lowest rates. “There is a clear pattern as far as the correlation between the number of bidders and the bid rate goes,” he told the news outlet.According to Scroll.in, this rings true for the latest round of auctions, too.Separately, the news outlet cited a 2022 report by CreditEdge, a credit rating agency, that had said the Adani Group and Adicorp “have a strong relationship… of over 15 years”.CreditEdge wrote: “Adi Group was sourcing major coal requirement from Adani Enterprises Limited in the domestic market. However, for the past around 8 years, Adi group has started procuring coal from overseas market through Adani Global PTE Limited (Singapore) and Adani FZE (UAE), which belongs to Adani Group.”