Adani Group Faces No Immediate Investor Action After US Indictment: CRISIL

The charges stem from allegations of securities fraud, wire fraud, and violations of SEC regulations, accusing the defendants of making materially false and misleading statements

The agency also noted that the Adani Group has the flexibility to reduce certain discretionary capital expenditures (capex) based on financial market conditions and future capital availability

Source : PTI

Supporting the Adani Group, rating agency CRISIL Ratings said on Friday that the conglomerate possesses ample liquidity and robust operational cash flows to meet its debt obligations and committed capital expenditures. The agency also noted that, despite the US indictment of founder and chairman Gautam Adani, there have been no negative actions from lenders or investors thus far.

CRISIL highlighted that the Adani Group, which has the flexibility to adjust certain discretionary capital expenditures based on market developments and future capital availability, maintains a healthy EBITDA and cash reserves. This strong financial position reduces its reliance on external debt to sustain operations, according to the agency’s bulletin.

On November 20, 2024, the US Department of Justice and the US Securities and Exchange Commission (SEC) filed an indictment and a civil complaint, respectively, in the United States District Court for the Eastern District of New York, targeting Gautam Adani, Sagar Adani, and Vneet Jaain, key executives of Adani Green Energy Ltd (AGEL).

The charges stem from allegations of securities fraud, wire fraud, and violations of SEC regulations, accusing the defendants of making materially false and misleading statements in the bond offering documents of Adani Green Energy Ltd (AGEL) regarding its anti-bribery and anti-corruption policies.

"CRISIL Ratings 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 AGEL," the rating agency said. 

"These ratings 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," it said.

In some instances, it also considers the added flexibility these entities gain from their affiliation with, and importance to, the larger Adani Group, one of India's leading infrastructure conglomerates.

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

According to feedback from management and select lenders, CRISIL Ratings stated that these developments have not yet resulted in any negative actions from lenders or investors, such as acceleration of debt repayment or adjustments to spread resets.

The agency also noted that the Adani Group has the flexibility to reduce certain discretionary capital expenditures (capex) based on financial market conditions and future capital availability. CRISIL stressed that all outstanding ratings are under continuous surveillance.

With the issue still under judicial review, CRISIL affirmed that the Adani Group has adequate liquidity and operational cash flows to meet its debt obligations and committed capex plans in the medium term. However, the agency cautioned that any adverse regulatory, judicial, or government actions could worsen the situation. "These developments will be closely monitored," CRISIL said, adding that the potential impact on the Adani Group’s access to both domestic and international capital, as well as its ability to refinance upcoming bullet repayments and a significant increase in financing costs, will also be key factors under scrutiny.