Adani Group’s debt exceeds by 1 percent of the Indian Economy as per the latest reports
Analysis from valid sources shows that the debt owed by the Adani group comprises 1 percent of the Indian economy. The results have highlighted the scale of the financial troubles amid the accounting fraud allegations by the wealthiest man in Asia.
The liabilities contributed account for ten of the listed Adani groups comprising 3.39 trillion rupees or 41.1 billion USD. The data has been collected from the QUICK FactSet. The companies that added to the liability are ACC, Ambuja Cements, and New Delhi Television. These were the three companies purchased by Gautam Adani in the previous year.
India’s nominal GDP accounted for 273 trillion rupees, as per the reports by the International Monetary Fund. It implies that Adani’s debt account for 1.2 percent of the total GDP of the Indian economy.
The ten Adani groups have been found to have a collective equity ratio of 25 percent. As of March 2022, one of Adani’s companies, listed as Adani Green Energy had an equity ratio of only 2 percent.
The ten listed companies owned by Gautam Adani contribute 4.8 trillion rupees in the total assets, but investors have been wary of increasing excessive debts. The group consists of a large number of privately-owned companies, indicating that the total debt could be higher.
The New York short seller group’s ability to bring down one of the wealthiest men in Asia, Gautam Adani, and the businesses he amassed while casting doubt on the firm’s legitimacy has given the previously unknown Hindenburg report more traction.
The Hindenburg report has had a significant negative impact on the business of Gautam Adani. The short-seller has significantly hurt Adani’s business. He no longer holds the title of the wealthiest man in the world and is currently ranked No. 21 on the Bloomberg Billionaires Index.
Eight of the ten stocks with the worst performance belong to Adani’s Enterprises. The group and the banks gave loans to the businesses so they could continue suffering. The State Bank of India has decreased by 11% since the release of the Hindenburg report.
It might have a significant effect on the Indian market. The negative publicity the Adani-related headlines received caused foreign investors to become interested in Indian stocks. Investors have suffered significant losses as a result of the stock market collapse.
Previously, the RBI expressed concerns about it and requested information from the banks regarding their exposures to the Adani group. As a supervisor and regulator of the banking industry, the RBI has stated that it keeps an eye on each bank to ensure financial stability. The banking industry’s strength is evaluated using several additional criteria, including capital adequacy, asset quality, liquidity, coverage, and many others. Additionally, the banking industry is currently strong.
Adani Group also declared on February 1 that it has canceled all Follow-On Public Offerings (FPO) and will refund investors’ money in light of the ongoing controversy surrounding The Hindenberg Report, which the company has chosen to focus on. Adani Group shared on an exchange filing that the board of directors has decided not to proceed with the FPO in the best interest of the investors, and the equity shares account for 20,000 crores INR.
The report accused Adani Group of using tax havens and raised debt concerns.
The company’s trading experience with declining stock prices, according to Gautam Adani, was taken into account when making the decisions.
Adani Group’s attempt to instil the confidence of the investors after the stock rout:
Recently, the RBI Governor Shaktikanta Das stated that the size, resilience, and strength of the Indian banking system are larger and can not be affected by the Adani saga or an individual incident like this as he tried to downplay the Adani group chaos among the trembling investors.
The Adani group has even decided to prepay its debt worth 500 million USD after some banks backed down on refinancing the deb of the Gujarat-based conglomerate after the Hindenburg report on the group that has caused its stocks to plummet.
Barclays PLC, Standard Chartered Bank, and Deutsche Bank AG were the banks that provided the Adani group with a loan of 4.5 billion USD to proceed with the purchase of Holcim Ltd last year. A part of the loan is due on March 9. The people familiar with the matter had stated that the banks were in discussion to refinance the loan up to a week before the critical report came to light. The representatives of the respective banks have declined to comment on the matter.
It marks the second time that the Adani group has taken a drastic step to regaining investor confidence as it plans to stem the stock route. He has stated that the company has prepaid loans of 1.1 billion USD, which are backed by the shares.
Edited by Prakriti Arora