Adani Group debt a concern…
While Shareholders of India’s largest bank State Bank of India
have raised concerns about a proposed loan to Adani Enterprises to help fund the opening of the controversial Carmichael coal mine in northern Australia, Adani Group has been already is in a huge debt, Though the group has been doing well, the growing debt raises a concern.
Recently Officials from New York-based BlackRock inc. and Norway’s Storebrand ASA have contacted the State Bank of India, which is majority-owned by the Indian government, about the loan. The loan’s value is expected to be as much as 50 billion rupees ($678 million), according to Indian media reports.
There has been lot of talks lately about the ever rising debt of Adani Group.
The Adani Group’s total outstanding debt came to more than $30 billion as of November 11, according to data from Dealogic, including $7.8 billion worth of bonds and $22.3 billion in loans. High debt is nothing new among Indian conglomerates but the Adani Group’s rapid expansion has raised concern.
Credit Suisse warned in a 2015 “House of Debt” report that the Adani Group was one of 10 conglomerates under “severe stress” that accounted for 12 per cent of banking sector loans. Yet the Adani Group has been able to keep raising funds, in part by borrowing from overseas lenders and pivoting to green energy.
The report had said Adani continues to enjoy ample access to capital, both at home and overseas, and can tell investors that he has never defaulted on a loan despite highly leveraged balance sheets. Adani Group companies tapped international debt markets with bond sales of more than $2 billion and Adani Gas sold a 37.4 per cent stake to Total for a reported $600m, which gave him ample cash flow to weather the shock of the pandemic when it hit.
Adani being in huge debt has also bid for the whole of DHFL at the last minute. The move did not go well with other bidders and some may have even back off from the bidding process. Source said that the last minute offer by Adani has raised concerned about their connections and hence raised concerned with others. While Adani has been growing entity the Debt that the firm has and even then enjoying more debt have raised some eyebrows.