There’s more trouble brewing for Gautam Adani with the Reserve Bank of India asking banks to share the details of the loans sanctioned by them to the group companies even as most banks, especially private players, are said to be declining fresh proposals from Adani Group.
This comes even as rating agency ICRA has put a watch on its rated portfolio in the group, and Citigroup’s wealth unit has decided to stop accepting Adani securities as collateral for extending margin loans to its clients.
Adani group has been under pressure since January 24, when Hindenburg Research, a US-based short-seller firm published a report, which had several adverse observations regarding accounting practices, related-party transactions, concentrated shares ownership by a few overseas investment firms and share price movement of the Adani group of companies.
On Wednesday, the board of Adani Enterprises Ltd (AEL) decided not to go-ahead with the ₹20,000-crore fully subscribed follow-on public offer (FPO) after the group companies’ listed shares got routed on the stock exchanges. It has been a blood bath on the domestic bourses with over $100 billion of the company’s value wiped out since the report was published.
Stocks, bonds take a beating
On Thursday, stocks of three Adani entities including Adani Transmission and Adani Green Energy hit their respective 10 per cent lower circuit limits. The shares of the conglomerate’s flagship Adani Enterprises were the worst hit as it was 26.5 per cent lower at ₹1,564.7 on BSE before hitting a 52-week low.
Adani’s bonds trading overseas also fell to distressed levels. US dollar-denominated bonds of some Adani group companies continued at distressed levels on Thursday though a marginal softening in yields of some bond offerings in early deals, could indicate a reversal of sentiments, though it is too soon to tell.
Bankers said the RBI may be wanting to assess the systemic implications of the aforementioned developments on banks. They emphasised that existing companies of the group have enough cashflows to service the loans taken from banks. However, in the case of new projects taken up by the group, if the promoter’s equity portion doesn’t come through, banks could re-look at the sanctions.
ICRA noted that the large debt-funded capex programme of the group remains a key challenge but some of the planned capex is discretionary in nature and can be deferred depending on the liquidity position.
Guatam Adani, however, said that decision to withdraw the FPO will not have any impact on the company’s existing operations and future plans. “The fundamentals of our company are strong. Our balance sheet is healthy and assets, robust. Our EBIDTA levels and cash flows have been very strong, and we have an impeccable track record of fulfilling our debt obligations. We will continue to focus on long-term value creation and growth will be managed by internal accruals,” Adani said.