Adani Group touts 'very healthy' balance sheet in bid to calm investors

Billionaire Gautam Adani's embattled conglomerate said its balance sheet is "very healthy" and is laser focused on continuing business momentum, as it looked to reassure investors to keep faith in the conglomerate despite a share rout triggered by a damning report by a US short-seller.

Group CFO Jugeshinder (Robbie) Singh in an earnings call said the group is confident of its internal controls, compliance and corporate governance.

Separately, it released a compendium of group companies to highlight that it has adequate cash reserves and has ability to refinance debt.

"Our balance sheet is very healthy. We have industry-leading development capabilities, strong corporate governance, secure assets and strong cash flows," Singh said. "Once the current market stabilises, we will review our capital market strategy, but rest assured we are confident in our continued ability to deliver business that provides superior returns to shareholders." The group has been under pressure since the Hindenburg Research on January 24 accused it of accounting fraud and stock manipulation, allegations that the conglomerate has denied as "malicious", "baseless" and a "calculated attack on India".

Listed companies of the group lost over USD 125 billion in market value in three week. Stocks of most group firms were up on Wednesday.

"We are laser focused on continuing our business momentum, in this market volatility," Singh said. "We are confident in our internal controls, compliance and corporate governance." Adani group's gross debt stood at Rs 2.26 lakh crore as on September 2022 and had cash of Rs 31,646 crore. "Our businesses operate on long-term annuity contracts generating assured and consistent cash flows with no market risk," it said in the credit report.

Despite the ports-to-energy conglomerate denying allegations, the report triggered a massive sell-off in the group firms' shares.

Separately, it released a compendium of group companies to highlight that it has adequate cash reserves and has ability to refinance debt.

"Our balance sheet is very healthy. We have industry-leading development capabilities, strong corporate governance, secure assets and strong cash flows," Singh said. "Once the current market stabilises, we will review our capital market strategy, but rest assured we are confident in our continued ability to deliver business that provides superior returns to shareholders." The group has been under pressure since the Hindenburg Research on January 24 accused it of accounting fraud and stock manipulation, allegations that the conglomerate has denied as "malicious", "baseless" and a "calculated attack on India".

Listed companies of the group lost over USD 125 billion in market value in three week. Stocks of most group firms were up on Wednesday.

"We are laser focused on continuing our business momentum, in this market volatility," Singh said. "We are confident in our internal controls, compliance and corporate governance." Adani group's gross debt stood at Rs 2.26 lakh crore as on September 2022 and had cash of Rs 31,646 crore. "Our businesses operate on long-term annuity contracts generating assured and consistent cash flows with no market risk," it said in the credit report.

Despite the ports-to-energy conglomerate denying allegations, the report triggered a massive sell-off in the group firms' shares.

On withdrawing a fully-subscribed follow-on share of AEL, Singh said this was owing to the unprecedented market and stock price fluctuation that followed the Hindenburg report. "The decision to not go ahead with the FPO will not adversely affect our existing operations and future plans." "We have an impeccable track record of responsibly managing our balance sheet. We are undisputed leaders in executing complex infrastructure projects," he said, adding while in the initial stages of a new project, leverage tends to increase, strong cash flows thereafter results in rapid deleveraging.

Last week, Moody's Investors Service cited concerns about Adani's ability to raise capital or refinance maturing debt in the coming years while S&P Global Ratings cut the rating outlook for four group firms, including Adani Ports and Special Economic Zone Ltd and Adani Electricity Mumbai Ltd, to negative from stable. "There is a risk that investor concerns about the group's governance and disclosures are larger than we have currently factored into our ratings," S&P had said.

In August last year, CreditSights, a Fitch Group unit, described the conglomerate that spans ports to electricity, city gas and cement as "deeply overleveraged". Adani Group had rebutted the CreditSights assessment.