Domestic banks and financial institutions, which are the largest creditors of the Adani Group with close to Rs 95,000 crore, or 42%, of its total Rs 2.58 lakh crore debt, are likely to look at any fresh exposure to the group with caution.
In fact, banks which were looking to take a part of the Rs 20,000 crore loan through a sell down by State Bank of India have already taken a call to go slow on the process, said people aware of the matter.
“It is but natural that banks will want to go slow. This is an evolving situation and everyone including the Adani Group is cautious. The sell-down process which was proceeding smoothly so far is likely to face some delay,” said one of the people.
An Adani Group spokesperson did not immediately reply to an email seeking comment.
Top public and private sector banks had lined up to take a bite of a rare greenfield project finance loan to Adani Enterprises, as lead lender SBI was looking to sell down a large chunk of the credit line it had sanctioned earlier this year for the conglomerate’s petrochemicals debut, ET had reported on October 31.Bank of Baroda, Punjab National Bank, Union Bank of India, Central Bank of India, ICICI Bank and Axis Bank had either committed or were in the process of committing funds to the $4 billion polyvinyl chloride (PVC) project at Mundra in Gujarat. The 15-year loan was priced at 9.25% by SBI.The 2 million tonne greenfield PVC plant would be the Adani’s Group’s first in the petrochemical sector and is expected to double India’s capacity to make the plastic polymer used to make raincoats, wires, plastic pipes, shower curtains and medical equipment among other things.
“Greenfield projects which have a higher risk will be impacted more because lenders as well as investors will be wary of any untoward incident or delays on these projects due to the charges faced by the promoters. Solar projects which the company is betting big on could be hit because it’s both in the line of fire of US prosecutors and also as these projects are all in early stages of development,” said a second person aware of the group’s dealings with banks.
To be sure, the PVC loan has already been underwritten by SBI and the group is assured of its funding. But its plans to widen its debt profile could take a hit, at least immediately.
Ratings firm Care said moderation in financial flexibility of the Adani Group due to the indictment and its impact on the group’s leverage shall be key rating monitorable.
“Impact on the fundraising capabilities — both equity as well as debt — consequent leverage levels, government or regulatory action, progress on under implementation capex and debt covenants of Adani Group borrowings pursuant to the aforesaid developments will also be closely monitored,” it said.
A presentation by the group made public on Monday showed that it had Rs 53,024 crore of cash balances, making up 20.53% of its gross debt — enough to service 28 months of payables.
Total repayments for the rest of this fiscal year are Rs 7,787 crore, which will rise to Rs 19,636 crore next fiscal year and peak at Rs 35,433 crore in the fiscal year through March 2027. The group has maintained that its debt maturity every year is covered by cash balances and fund flows from operations.
Domestic banks and financial institutions’ exposure to the Adani Group has increased to 42% of total loans in the first half of the year from 36% at the end of March, a company presentation showed. While exposure by global banks has fallen to 27% of total debt in September 2024 from 29% at the end of March 2023, indicating increasing dependence of the group to local lenders.
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