CreditSights discovers errors in debt report on Adani Group firms

NEW DELHI: Fitch Group’s debt research unit CreditSights, which last month had called out Adani Group for being ‘deeply overleveraged’, now says that it “has discovered calculation errors” in two Adani Group companies.  It, however, remained firm that the latest “corrections” did not change its investment recommendations.

The submission of the wrong calculation by CreditSights comes following a conversation with Adani Group CFO (Jugeshinder Singh), head of corporate finance (Anupam Misra) and head of ratings (Rahul Kumar) during the week August 22. “As part of this discussion, we discovered calculation errors we had made in two of the Adani Group companies, Adani Transmission and Adani Power. For Adani Transmission, we have corrected our EBITDA estimate from Rs 4,200 crore to Rs 5,200 crore. For Adani Power, we have corrected our gross debt estimate from Rs 58,200 crore  to Rs 48,900 crore. These corrections did not change our investment recommendations,” CreditSights said in a new report dated September 7.

On the Group’s aggressive expansion plans and entry into new business that requires funds of billions of dollars, CreditSights said that the “Management (Adani) views that the group’s leverage is at manageable levels, and that its expansion plans have not been mainly debt funded.” It, however, added, “Though we have taken cognisance of management’s viewpoints, we have a different opinion on the above.”

The Gautam Adani-led Group has seen its debt levels increase over the past five years from Rs 1 lakh to Rs 2.2 lakh crore as of March 2022. According to a recent analysis by Credit Suisse,  the Group’s acquisition of Holcim’s India businesses (AAC and Ambuja Cement) alone is expected to add another Rs 40,000 crore to the Group’s debt, taking it to nearly  Rs 2.6 lakh crore. The Group says the leverage ratios of its companies are healthy. 

Adani Group debt swells over past five years

Gautam Adani-led Group has seen its debt levels increase over the past five years from Rs 1 lakh to Rs 2.2 lakh crore as of March 2022. A Credit Suisse analysis said the Group’s acquisition of Holcim’s India businesses alone is expected to add Rs 40,000 crore to its debt, taking it to nearly Rs 2.6 lakh crore