Adani Group has sufficient liquidity to meet debt obligation: CRISIL on US indictment

Amid Adani Group’s indictment controversy, domestic rating agency CRISIL Ratings on Friday said the power-to-port conglomerate has “sufficient liquidity and operational cash flows to meet debt obligations and committed capex plans over the medium term”. The ratings agency, which rated the Adani group’s infrastructure and holding entities, stated that the alleged charges have not led to any negative actions so far by lenders or investors, such as acceleration of debt repayment or spread resets. 

“We understand the Adani Group has the flexibility to reduce certain discretionary capital expenditure (capex) depending on developments in financial markets and future capital availability,” says CRISIL.

The agency opines that the matter is sub judice and any adverse regulatory, judicial or government action may exacerbate the situation. “Thus, these actions will be monitored. Further, any fall-out of developments restricting the Adani Group’s access to domestic and international capital and hampering its ability to refinance upcoming bullet repayments as well as a significant increase in its cost of financing will also be key monitorables.”

CRISIL in its report said that it has taken note of these developments and their likely impact on the financial flexibility of the group, including the fall in the market capitalisation of the listed companies of the group, movement in bond yields, and calling off the $600 million bond offering of Adani Green Energy Ltd (AGEL).

On November 20, 2024, the United States Department of Justice and the U.S. Securities and Exchange Commission (SEC) issued an indictment and a civil complaint, respectively, in the United States District Court for the Eastern District of New York, against Gautam Adani and his nephew Sagar Adani, and Vneet Jaain, key functionaries of AGEL.

The alleged charges relate to allegations of securities fraud, wire fraud and violation of the SEC guidelines that led to materially false and misleading statements in the bond offering documents of AGEL with respect to anti-bribery and anti-corruption policies.

Responding to the allegations, AGEL clarified to exchanges that the charges against its three directors, including the chairman, related to three counts of "criminal indictment" but the "alleged Foreign Corrupt Practices Act (FCPA) violations".

On ratings of the Adani group’s infrastructure and holding entities, CRISIL said that the actions are driven largely by the strength of their business and financial risk profiles. “They, inter alia, factor in the steadiness of cash flows, the infrastructure nature of assets with long concession periods, and extent of cash flow cushions.”

“In certain cases, we also factor in the additional flexibility available to these entities through their association with, and criticality to, the larger Adani Group, which is one of the leading infrastructure groups in India,” it added.

The Adani Group reported a healthy EBITDA (earnings before interest, taxes, depreciation, and amortisation) of ₹82,917 crore for fiscal 2024, with a net debt to EBITDA ratio of 2.19 times. Cash balance was over ₹53,000 crore across 8 listed operating entities as of September 2024 against long-term debt maturities of ₹27,500 crore; and go-to market/construction facility of ₹8,919 crore during October-March fiscal 2025 and ₹2,137 crore during fiscal 2026, as per CRISIL data.

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