Adani Group is once again in the news and while the bulk of the current news flow is around the claims made by Hindenburg Research and the ensuing battle of words between the two entities, a latest report by global financial major CLSA has brought to the fore interesting insights into the group’s overall debt scenario.
According to the report, the total debt of the top Adani Group companies – Adani Enterprises, Adani Ports, Adani Power, Adani Green and Adani Transmission — has increased from Rs 1 trillion to Rs 2 trillion over the past three to four years, bank funding has not materially increased in the past few years.
“Within this (total debt), bank funding is less than 40 per cent, we estimate, while bonds, financial institutions and foreign banks form a larger part of the group debt,” stated the report released today (January 26).
It further stated that bank debt (term loans, working capital, and other facilities) forms just 38 per cent of the total debt, while bonds/commercial paper constitute 37 per cent and 11 per cent is borrowing from financial institutions with the remaining 12-13 per cent coming from inter-group lending.
“On an absolute level, we estimate that bank debt is Rs 700-800 billion of the Rs 2 trillion debt in FY22. While debt levels have doubled from Rs1tn to Rs2tn in the past three years, bank debt has increased by more than 25 per cent. The share of bank debt in overall group debt has reduced materially and we estimate that incrementally banks have only lent Rs 150 billion, or 15 per cent of the Rs1tn the group companies have borrowed over the past three years,” stated the report while adding that large acquisitions, such as cement, have been fully funded by foreign banks.
According to the global research firm, the group has indicated that the share of PSU banks in its funding mix has dropped from 55 per cent in FY16 to 26 per cent now while the share of private banks has fallen from 31 per cent to 8 per cent.
“A greater part of the group’s funding now comes from bonds at 37 per cent (funding ports and the transmission business) and from foreign banks (18 per cent of debt),” stated the report.