Adani investor Elara co-owner in Bengaluru defence firm

ELARA India Opportunities Fund (Elara IOF), an Elara Capital-managed venture capital fund, is one of the top four entities registered in Mauritius holding shares predominantly in Adani Group companies. Despite reducing its share over the last three years, its holdings in the three Adani companies add up to over Rs 9,000 crore or over 96 per cent of its total corpus in December 2022.

However, Elara- a key Adani investor- is also a co-owner in the Bengaluru-based defence company Alpha Design Technologies Private Limited (ADTPL), records investigated by The Indian Express have shown.

The defence company incorporated in 2003 works closely with DRDO and ISRO, and holds a Rs 590 crore contract with the Union Ministry of Defence as of 2020, to update and digitise the ageing Pechora missile and radar systems.

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Adani Defence Systems and Technologies Ltd is a 26 per cent stakeholder with management control in the company, but financial statements and records from the Registrar of Companies show Adani and Elara - through a pyramid structure - together own a majority of 51.65 per cent in the company. Adani has been embattled since the US-based Hindenburg Research raised questions about its funding source. It prompted the Supreme Court to set up a panel and ask market regulator Sebi to probe the issue.

A spokesperson for Adani Group said in a statement, "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."

The Adani Group's statement added, "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 per cent. The largest promoter is Vasaka Promoters & Developers."

As per RoC records, the ownership details of Vasaka Promoters and Developers reveal Elara IOF bought 44.3 per cent in Vasaka for Rs 40 crore, becoming the single largest shareholder on November 5, 2018. Elara IOF also acquired 0.53 per cent directly in ADTPL for Rs 7.62 crore on December 1, 2018. Elara IOF effectively holds almost 26 per cent in ADTPL.

Currently, over 96 per cent of Elara's investments in India are through Elara IOF in Adani Group companies. As of December 31, 2022, Elara IOF has 1.6 per cent in Adani Enterprises, 1.62 per cent in Adani Total, and 3.62 per cent in Adani Transmission.

Previously, it held stakes in Adani Ports (2.35 per cent till March 2021) and Adani Green (1.67 per cent till September 2021). Elara's holding Adani Group companies has been on the decline in the last three years because of profit booking as share prices spiked.

ADTPL filings show Vasaka Promoters and Developers Pvt Ltd are the owners with a 56.7 per cent stake as of March 31, 2022.

In December 2018, Adani Defence put in Rs 400 crore to acquire a 26 per cent stake in ADTPL. This put the company valuation at Rs 1,538 crore. Adani and Elara, thus ended up with 51.65 per cent together, amounting to a majority stake in the defence company.

After Adani's 26 per cent acquisition, the company passed a resolution which categorised the former as one of the promoters with Vasaka, in which Elara IOF is the largest shareholder with 44.3 per cent, as well as Col H S Shankar.

Col Shankar has been the ADTPL CMD since its incorporation in 2003. He holds 0.019 per cent in the company as of March 31, 2022, and sits on the Vasaka board. For the year that ended March 31, 2021, ADTPL reflected a net profit of Rs 9.7 crore on a Rs 450 crore turnover.

ADTPL's unique corporate structure makes it a Vasaka Promoters & Developers and Adani Defence subsidiary.

"The Company is a subsidiary company of Vasaka Promoters & Developers Pvt Ltd by virtue of shareholding. The company is a subsidiary of Adani Defence Systems and Technologies Limited by virtue of control over the composition of the Board of Directors," the ADTPL 2020-21 annual report reads.

As per the Adani Enterprises Ltd (AEL) annual report, ADTPL is involved in making satellite and ground equipment, electronic war and military communications equipment, and aerospace assembly. The company has also operationalised a simulator for the IAF's MiG-29 craft in Adamput under the 20-year Build Operate Maintain deal.

The most recent contract ADTPL won came early this year for LWRRs (lightweight radio relays) for Indian troops. ADTPL happens to be the first Indian offset partner for Israel Aerospace Industries (IAI) to produce Air Defence Fire Control Radars. Sixty-six of these have been delivered to the army already.