On November 20, 2024, the United States Department of Justice and the US 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, Sagar Adani and Vneet Jaain, key functionaries of Adani Green Energy Ltd (AGEL).
The 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.
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.
CRISIL Ratings has rated the Adani group’s infrastructure and holding entities.
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.
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.
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[1] against long-term debt maturities of ~Rs 27,500 crore; and go-to market/construction facility of Rs 8,919[2] crore during October-March fiscal 2025 and Rs 2,137[3] crore during fiscal 2026.
Based on management and select lender feedback, CRISIL Ratings understands that these developments have not led to any negative actions so far by lenders/investors, such as acceleration of debt repayment or spread resets. Further, 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.
All our outstanding ratings are under continuous surveillance.
The issue at hand is sub judice and CRISIL Ratings understands that Adani Group has sufficient liquidity and operational cash flows to meet debt obligation and committed capex plans over the medium term.
That said, CRISIL believes 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.
