S&P puts Adani Transmission's ESG rating under review on governance issues

Global rating agency Standard and Poor's (S&P) has placed Adani Transmission Ltd's (ATL) environmental, social, and governance (ESG) evaluation under review. This follows recent allegations of significant governance lapses at the Adani group of companies.

On January 24, 2023, a short-seller report (Hindenburg report) claimed there were significant governance issues at the Adani group. Many allegations relate to disclosures and actions at the shareholder level. Since then, equity and bond prices have plummeted for the group's entities, including ATL.

"We will closely monitor developments, including any investigations by the Indian regulators and any additional disclosures by the Adani group," S&P said in a statement.

The rating agency said allegations related to group governance and disclosures may affect the appetite of fund providers and business partners to support ATL's growth. This may raise financial and operational risks for the company.

"Our current assessment of ATL's governance factors in some controlling shareholder's weight in decision-making, including on related-party transactions. Common parentage and name-sharing also expose ATL to reputational risks from the wider Adani group," it added.

The rating agency aims to complete the review of ESG evaluation in the coming months. It will assess the implications of the allegations on ESG evaluation.

ATL is the largest private power transmission and distribution company in India. The Adani family controls the company with a reported 75 per cent stake, with the balance in free float. ATL operated 18,795 circuit kilometres of electric transmission lines in FY23.

The company had a total transformation capacity of 40,001 megavolt amperes. It owns a 500-megawatt coal-fired power plant.