Rating firms seek exposure details from lenders on Adani companies

Their exposure amounts to 38% of the group's total debt

Indian banks, which have extended loans of about Rs 80,000 crore to Adani Group, rushed to allay investor concern over their exposure to the conglomerate after a report by US-based investment research firm Hindenburg Research alleged that the group was engaged in a “brazen stock manipulation and accounting fraud scheme”.

“We have been getting calls from investors over the weekend asking about exposure. We have compiled the data on our loan exposure and other investments and have shared the details with them,” said a large public sector bank official.

According to bank officials, international rating agencies have also asked for information from banks on their exposure to Adani Group.

Bankers said most of their exposures are based on cash flows of Adani Group companies, and that there is no reason for immediate worry, although they are monitoring the situation.

According to a CLSA report, Indian banks have around Rs 80,000 crore exposure to Adani Group, which is 38 per cent of the group’s total debt.

Punjab National Bank said on Monday that it has an exposure of Rs 7,000 crore to the group. Its Managing Director and Chief Executive Officer Atul Kumar Goel said total exposure includes an investment of Rs 42 crore and that the bank is keeping a close watch on the situation, reported news agency PTI.

Bankers said investors are worried about banks’ non-fund exposure to Adani. Some of their non-fund exposure is as much as 40 per cent of total exposure.

CLSA said a ballpark exposure of private banks to the group is 0.3 per cent of 2023-24 (FY24) loans and 1.5 per cent of FY24 networth.

“For public sector banks, the exposure is 0.7 per cent of FY24 loans and 6 per cent of FY24 networth,” it added.

The top five Adani Group companies, including Adani Enterprises, Adani Ports, Adani Power, Adani Green, and Adani Transmission have a consolidated debt of Rs 2.1 trillion as of 2021-22, according to the report.

Of the total debt of Rs 2.1 trillion, bank debt — term loans, working capital loans, and other facilities — constitutes about 38 per cent of the group’s total debt.

JPMorgan in a report said Adani’s capital expenditure (capex0 plan, which is high, needs to be monitored.

“We note that while the group’s disclosed debt/earnings before interest, tax, depreciation, and amortisation metrics look reasonable, the planned capex looks high at $120 billion over the next five to 10 years. Financing of the same remains monitorable,” observes the note.

State Bank of India, the country’s largest lender, had said its exposure to Adani Group was well below the Reserve Bank of India’s norms on the large exposure framework and that all exposures are secured by cash-generating assets.