endangered Crisil Ratings, which backs Adani Group, on Friday said the group has adequate cash and operating cash flows to meet debt obligations and committed capital expenditure. The rating agency said that no negative action has been taken so far by lenders and investors after the group’s founding chairman Gautam Adani was prosecuted in the US. Crisil said in its bulletin that Adani Group has scope to reduce discretionary capital expenditure (capex) based on developments in the financial markets and future capital availability. It has better earnings before tax (Ebitda) and cash balance which reduces its dependence on external debt to maintain operations.
what is the matter
The US Department of Justice and the US Securities and Exchange Commission (SEC) issued an indictment on November 20, 2024 in the US District Court for the Eastern District of New York against Gautam Adani, Sagar Adani and Vineet Jain, key executives of Adani Green Energy Limited (AGEL). And filed a civil complaint. The charges relate to securities fraud, wire fraud and violations of SEC guidelines by making false and misleading statements regarding anti-bribery and anti-corruption policies in AGEL’s bond offering documents.
What did CRISIL say?
“CRISIL Ratings took note of these developments and their potential impact on the financial strength of the group,” the rating agency said. The issues noted include the decline in market capitalization of the group’s listed companies, fluctuations in bond yields and the cancellation of the US$ 600 million bond offering of AGEL.” Agency Adani Group’s infrastructure and core (holdings) Also determines the reputation (rating) of the units. “These ratings are based primarily on the strength of their business and financial risk,” CRISIL said. They take into account, inter alia, the sustainability of cash flows, the infrastructure nature of assets with long grace periods and the extent of cash flows.”
Lenders did not take negative action
“Adani Group reported healthy earnings before tax (Ebitda) of Rs 82,917 crore for FY 2023-24, with a net debt-to-Ebitda ratio of 2.19 times,” the agency said. “CRISIL Ratings is aware that despite these developments, no negative action has been taken so far by lenders/investors,” the agency said based on its response. “Furthermore, we believe that the Adani Group has room to reduce discretionary capital expenditure (capex) based on growth in the financial markets and future capital availability,” the statement said. Crisil said this matter is pending in the court and the Adani Group has sufficient cash and operating cash flows to meet debt obligations and committed capital expenditure plans in the near future.
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