New Delhi: Elara India Opportunities Fund – one of the four Mauritius-based funds that hold shares predominantly in Adani Group firms – is a promoter entity in a defence company that has a Rs 590-crore contract with the Union government, the Indian Express reported on March 15, Wednesday.
Elara IOF is a venture capital fund managed by Elara Capital.
Bengaluru-based Alpha Design Technologies Private Limited (ADTPL), incorporated in 2003, works closely with the Indian Space Research Organisation and Defence Research and Development Organisation. It was reportedly acquired by the Adani Group in 2019. But, the Indian Express report says, Elara is a co-owner along with the Adani Group.
In its January 24 report, among other allegations, US-based short seller Hindenburg Research said that three funds, including Elara, engaged in circuitous trading and market manipulation of the Adani group stocks, the Morning Context reported.
Another report by the news outlet in 2021 had said that 97% of Elara IOF’s net worth comes from Adani companies. The Indian Express noted that even after significantly reducing its share over the last three years, its holdings in three Adani firms add up to over Rs 9,000 crore or over 96% of its total corpus in December 2022.
As of December 31, 2022, Elara IOF holds 1.6% of Adani Enterprises, 3.62% of Adani Transmission, and 1.62% of Adani Total, the IE report said.
According to a CARE Ratings press release in January 2021, ADTPL is a subsidiary of Adani Defence.
A spokesperson of the Adani Group told the daily that the largest promoter in ADTPL is Vasaka Promoters & Developers. However, the records cited by the Indian Express reveal that Adani Group and Elara together own a majority stake (51.65%) in the Bengaluru-based company.
“In 2017, Adani Defence was looking for companies which can provide both defence electronics as well as aero-structures capabilities in India. Alpha Design Technologies had capabilities across both electronics as well as aerostructures.”
“Adani Defence invested in ADTL in 2018… Adani Defence had taken a 26 per cent stake and had invested primary funds to grow the company to the next level. Elara India Opportunities Fund has a minority stake of 0.53%. The largest promoter is Vasaka Promoters & Developers,” the spokesperson told the daily.
However, the newspaper, citing Registrar of Companies records, said that Elara IOF bought a 44.3% stake in Vasaka for Rs 40 crore, and became the single largest shareholder on November 5, 2018.
“Elara IOF also bought 0.53% directly in ADTPL for Rs 7.62 crore on December 1, 2018. In effect, Elara IOF holds almost 26% (25.65%) in ADTPL,” the report said.
On December 13, 2018, Adani Defence invested Rs 400 crore to acquire 26% of ADTPL. “This valued the company at about Rs 1,538 crore. Thus, Adani and Elara together own 51.65%, i.e., a majority stake in ADTPL,” it added.
Later, the company made Adani Defence a promoter along with Vasaka – in which Elara IOF is the single largest shareholder with 44.3% stake – and Colonel H.S. Shankar.
Vasaka Promoters and Developers was incorporated in 1995 and in 2006. Its shareholding has changed since then.
At the end of March 31, 2022, Vasaka’s shareholding was: Elara IOF (44.3%), Amarjit Singh Bakshi-founded Safdarjung Estates (22.38%), Amarjit Singh Bakshi (1.38%), A.R. Murugappan (7.99%) and M. Subramaniam (7.99%), Wellness Charitable Trust (15.97%).
Murugappan and M. Subramaniam have been the company’s shareholders since the beginning.
As on March 31, 2022, ADTPL’s shareholding stood at: Vasaka 56.57%, Adani Defence 26%, Col Shankar: 0.019%, Elara IOF 0.53%, One Earth Capital 10.3% and Alpha Design ESOP Trust 5.8%.
Commenting on the report, Congress leader Rahul Gandhi on Wednesday said, “India’s missile & radar upgrade contract is given to a company owned by Adani & a dubious foreign entity called Elara.”
India’s missile & radar upgrade contract is given to a company owned by Adani & a dubious foreign entity called Elara.
Who controls Elara? Why is India’s national security being compromised by giving control of strategic defence equipment to unknown foreign entities? pic.twitter.com/DJIw7rxPB8
— Rahul Gandhi (@RahulGandhi) March 15, 2023
Trinamool Congress MP Mahua Moitra said that it is quite alarming to know that unknown foreign funds are controlling sensitive defence contracts.
The “Chhupa Rustom” category award at the Oscars goes to @DRDO_India and @PIBHomeAffairs.
Happy to have uknown foreign funds controlling sensitive defense contracts! Only for their best friend Mr Adani. #BJP4Oscars pic.twitter.com/HtQlQa6IOy
— Mahua Moitra (@MahuaMoitra) March 15, 2023
A history of wrong bets
Firstpost reported in 2018 that Elara and two other funds have been subject to at least one probe for alleged round-tripping. Under this process, considered illegal in India, money is transferred typically to a shell company before being returned, giving the impression the funds originate from a clean source. Indian authorities struggled to identify who ultimately controls the money, according to the report.
The report said that Elara India Opportunities Fund, along with other two funds, invested in companies whose founders fled India and are allegedly being probed for money laundering.
In 2018, as per the Firstpost report, the Enforcement Directorate examined Elara India, and other two funds, Cresta and Albula, as part of the Sandesara investigation to identify the ultimate beneficiary of the money.
Out of seven Adani stocks, only two were in the red on the BSE on Wednesday.
Adani Enterprises was up by 5.81%, Adani Ports and Special Economic Zone 3.81%, Adani Transmission 3.27%, Adani Green Energy 4.94%, and Adani Wilmar 3.12% on the BSE.
Adani Power was down by 1.27% and Adani Total Gas 3.05%.
Sensex was down by 344.29 points, or 57,555.90, while Nifty50 was down by 71.15 points, or