The Adani Group is taking all efforts to counter the opinion expressed in the recent CreditSights report, a subsidiary of Fitch Ratings, which said it remains “cautiously watchful” of the debt-funded expansion of the Adani Group, particularly the listed entities. Leading newspapers have published articles explaining how big is the Adani Group of Companies. And now, the Adani Group on its own has released a 15-page clarification. Surprisingly they have not filed a case so far against CreditSights which they had been filing against many journalists reporting about the group.
The classification raises more questions than answers. The People’s Commission on Public Sector and Public Services has already written to the governor, the Reserve Bank of India, the details of which are not available yet in the public domain. Many newspapers and YouTube channels have carried articles and videos raising various doubts.
It is time that the Reserve Bank of India verifies the entire loans given to the corporate sector, the clarifications issued by Adani Group, and the loans given by the State Bank of India to major corporates including the Adani Group.
Though Adani Group has only 6 listed companies, it has invested in 186 companies. What is happening to them will definitely affect the conglomerate and may lead to a collapse.
In 2008, Anil Ambani was declared the 6th richest person in the world by Forbes. Now he has declared in a UK Court that he is insolvent. All his loans are Non-Performing Assets, now the RBI, Finance Ministry and banks should explain to the country’s citizens why so much lenience was given to him. The Govt should also clarify about what happened to the Rafale deal, in which the Anil Ambani Group was to supply certain things.
Adani Group has stated that they have raised $16 billion via ‘Comprehensive equity,’ a combination of primary, secondary and committed equity from global investors including Total Energies, Abu Dhabi-based International Holding Company PJSC, QIA and Warburg Pincus. If that is so, how he is the third richest in the world.?
Adani Group has claimed that the group’s debt levels are well within the industry standards. They say that their companies have consistently delivered with portfolio net debt to ‘Earnings Before International Taxes, Depreciation and Amortization’ (EBITDA) ratio down from 7.6% to 3.2%. EBITDA has grown by 22% Compound Annual Growth Rate (CAGR) in the last 9 years and debt has only grown by 11% CAGR during the same period they claim.
RBI needs to verify this data considering all the 186 companies in which Adani has invested and not just the listed companies.
They also have stated that this has also resulted in the deleveraging of the promoter level debt and promoter pledges shares have reduced between 2020 and 2022. Does this apply to all the companies of the Adani group? If so, how newspapers have reported that Adani Group’s combined loans rose 40.5% to around Rs.2.21 lakh crores from Rs.1.5 lakh crores in the previous year?
How it has been reported that the Debt to Equity Ratio hit a four-year high of 2.36 at the end of March, up from 2.02 a year ago and a low of 1.98 at the end of March 2019. RBI has to verify and clarify, as this is the depositors’ money.
The Adani Group also has stated that they have an improved net debt to operating profit ratio and more than half of the loans have been reduced with public sector banks to allay concerns about the loan being over-leveraged. Is it true? RBI has to clarify. If that is true, why their loans with SBI for 3 different projects within a short time came to the limelight.?
They have also stated that their loans with PSBs have come down from 55% of all debt of the group firms in 2015-16 to 21% in 2021-22. They also claim that loans with private banks have come down to 11% from 31% during the same period, and the money raised through bonds has jumped from 14% to 50%. What about loans from foreign banks.? What about capital raised abroad? When do the bonds mature? Will they be able to repay the investors without taking new loans? A detailed study of RBI is needed.
What happened to Anil Ambani’s companies should not happen to Adani’s companies.
There are serious issues, and a fair share of controversies! Heroin was found being smuggled at the Mundra port. Everyday agitation is going on in the Australia Coal Project against the group. In the Vizingam Port which should have been completed by 2017, work has not been completed, and a massive agitation is going on demanding the scrapping of the project. There are serious issues with the Kattupalli Port. The State Govt could not accede to their request for expansion. The Airports run by Adani Group have serious complaints about maintenance and charges.
Are the banks looking at these issues? Is the RBI looking at them? Let us not forget Vijay Mallya’s Kingfisher Airlines and Mehar Choksi & Nirav Modi episodes along with so many others who have left the country with huge outstanding debts. When we compare all those loans together, the Adani Groups’ loan is much higher. It is time to be alert for banks. Time to review and inform the public and RBI.
The RBI also must implement its own decision taken in 2017 to keep a ceiling of Rs 10,000 crores for corporate loans.
Thomas Franco is the former General Secretary of All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University.
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