CreditSights finds errors in Indian Adani Group’s debt report

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The Adani Group logo is seen on the facade of one of its buildings on the outskirts of Ahmedabad, India April 13, 2021. REUTERS/Amit Dave

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NEW DELHI, Sept 8 (Reuters) – CreditSights, part of ratings agency Fitch, said it discovered miscalculations in its recent report on the debt of two electricity and transmission companies controlled by the person India’s richest, Gautam Adani, after a conversation with management.

Debt research firm CreditSights’ report late last month calling the conglomerate “deeply over-leveraged” and flagging other risks sent shares of many Adani companies plummeting. Read more

In a report dated Sept. 7, CreditSights said it spoke with Adani Group’s finance and other officials and reconciled some numbers from Adani Transmission (ADAI.NS) and Adani Power (ADAN.NS).

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“(Adani’s) management believes that the group’s leverage is at manageable levels and that its expansion plans have not been primarily debt funded,” CreditSights said. Read more

But CreditSights said on Thursday it was still concerned about the Adani Group’s overall level of debt.

For the Adani Group as a whole, “we are maintaining our original financial calculations and credit ratios, which leads us to remain concerned about the Adani Group’s leverage,” CreditSights said in an email to Reuters.

The Adani Group said on Thursday that its companies’ debt ratios “continue to be healthy and are in line with industry benchmarks for the respective sectors.” Adani also said that over the past decade the group has worked to improve its “debt metrics through our capital management strategy.”

Shares of Adani Transmission and Adani Power closed down around 1% each on Thursday, while five other companies in the group ended lower in a generally positive Mumbai market.

For Adani Transmission, CreditSights corrected its earnings before interest, tax and amortization (EBITDA), or core profit, estimated at 52 billion rupees ($652.45 million) from 42 billion rupees earlier. For Adani Power, it corrected its gross debt estimate to 489 billion rupees from 582 billion rupees.

He did not give the period for the estimates.

The combined market value of the seven publicly traded companies of the Adani Group – flagship companies Adani Enterprises (ADEL.NS), Adani Wilmar (ADAW.NS), Adani Ports (APSE.NS), Adani Green Energy (ADNA.NS), Adani Transmission, Adani Total Gas (ADAG.NS) and Adani Power – has grown approximately tenfold over the past three years to approximately $251 billion. Read more

($1 = 79.7000 Indian rupees)

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Reporting by Abinaya Vijayaraghavan and Krishna N. Das; Editing by Rashmi Aich and Jane Merriman

Our standards: The Thomson Reuters Trust Principles.

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