The Institute for Energy Economics and Financial Analysis, a think tank, has said the Adani group's coal, rail and port project in the Queensland province of Australia does not fit into India's changed energy policy climate.
Besides, the group's restructuring and its intention to get into the renewable energy business would have the "unintended" consequence of undermining financing for the proposed project, the institute's report said.
An email to an Adani spokesperson did not get a response, but a person close to the project said agreements for mine, equipment and coal offtake had been signed.
The group was also in discussions with South Korean, Australian, and Chinese banks for for accessing $1-1.5 billion of funds, the source added.
The institute, however, said it viewed Adani Enterprises' Australian project as a stranded asset, "left financially unviable by the structural changes in the Indian electricity market and in the global seaborne thermal coal sector, in a pattern similar to other Indian companies with failed foreign coal expansions since 2010".
The report pointed out the share price of Adani Enterprises had tripled in the past two years, significantly outperforming the 50 per cent gain in the Indian stock market. "The outperformance in the first three months of 2015 reflects the market's endorsement of the group's restructuring scheme," it added.
Adani Enterprises proposed a scheme in January for the demerger of Adani Ports and Adani Power to simplify the group structure, and improve transparency and free float of the three listed entities. The scheme involved Adani Enterprises listing Adani Transmissions.
The report said if power minister Piyush Goyal's hope of ending thermal coal imports within three years was directionally correct, this would leave the Adani Galilee project a stranded asset. "The halving of coal prices and structural decline in seaborne thermal coal markets combine with the change in the government's strategy toward the development of the Indian electricity sector," it said.
The Adani group's coal project in India was, however, not dependent on Indian demand, said the person quoted earlier.