Adani Group needs to make repayments to the tune of $1.6 billion in 2023-24 and for dues maturing in the next 13 months, it has to hold enough cash, a senior group official recently told institutional investors.

It is critical for the group to hold adequate cash so that it can avoid the risk of defaulting on loans and maintain its current sovereign equivalent rating.

Group Chief Financial Officer Jugeshinder Singh was addressing institutional investors at a Kotak Securities’ event ‘Chasing Growth 2023’.

The group is confident of making cash repayments till 2027, and the next big maturity that comes up for the group is in 2031.

He stressed the importance of cashflows as rating agencies tend to look at it as a marker of liquidity and solvency. He added that leverage was high in the infrastructure segment due to the accounting practice of booking capital when consumed. The rate of return looked low since booking of revenue happens later.

The Adani Group has its work cut out to repay its debt obligations as a ₹20,000-crore follow-on public offering by Adani Enterprises had to be abandoned following allegations of malpractices and round tripping by short-seller hedge fund Hindenberg Research in January. Since then, every move of the company to repay its dues in India and overseas has come under intense scrutiny. Part of the FPO was to have gone towards repaying debt.

Singh told institutional investors that the group’s gross debt was currently at $30 billion and $26 billion at the net level.

The intent of the group is to bring down its leverage to 2.2 times in terms of net debt to EBITDA (earnings before interest, tax, depreciation, and amortisation) from 3.1 post the acquisition of Holcim assets in India.

At the promoter level, loans worth $1.79 billion are outstanding against pledged shares and Singh said the entire amount has been covered through a long-term credit facility. He further said that there were no borrowings against the value of shares and so far there had been no margin calls.

Over the last couple of days, Adani Ports and Special Economic Zone pledged to prepay short-term debt worth ₹1,000 crore maturing in March. It repaid ₹1,500 crore on commercial papers to SBI Mutual Fund.