Taking note of fresh allegations of violations in promoter shareholding norms by the Adani group, bankers on Thursday differed over how this could impact the group and if the overhang of corporate governance issues could pose challenges.
Even as repayments are coming on time, a senior banker at a private sector lender said, corporate governance issues could continue to plague the group. The banker said the group has changed tack and is mostly raising equity by diluting stakes and has even prepaid a part of its loans.
“These allegations might be backdated but they need to be taken seriously from a corporate governance point of view. While the group has created assets that are making money and we are getting repaid on time, such matters from the past could make bankers cautious,” said the private sector banker.
He said Adani has also gone slow on expansion plans.
As per company disclosures, Adani promoters completed secondary transactions of $3.25 billion ( ₹26,800 crore) with investment firm GQG Partners in March and June. In August, it did a secondary transaction of $0.5 billion ( ₹4,100 crore) with Qatar Investment Authority.
Based on documents made available by the Organised Crime and Corruption Reporting Project (OCCRP), The Guardian and the Financial Times reported that offshore entities were used to buy shares in Adani group firms. The reports said Chang Chung-Ling and Nasser Ali Shaban Ahli—associates of Gautam Adani’s brother Vinod Adani—controlled a significant portion of shares meant to be traded by the public.
As per regulations by markets regulator Securities and Exchange Board of India (Sebi), promoters should restrict their shareholding to 75% of the equity. The reports said on Thursday that had these holdings cited above been counted as promoter group entities, the group would have run afoul of the shareholding norms.
These allegations come seven months after US-based Hindenburg Research alleged stock manipulation by Adani companies.
“We categorically reject these recycled allegations,” a spokesperson for the Adani group said in a statement. “Notably, these FPIs (foreign portfolio investors) are already part of the investigation by Sebi.”
The other banker, an executive at a public sector bank, believes the issue has acquired political overtones and bankers cannot be blamed just because they have done business with the Adani group. He said banks lend based on assessment of individual projects and their decisions are not based on individual names. All the quoted persons spoke on condition of anonymity as they are not authorised to make public statements.
“We have enough risk mitigants and do adequate due diligence to ensure that we lend to viable projects,” said the second banker cited above.
The group had a net debt of ₹1.87 trillion in FY23, as against ₹1.6 trillion in the previous fiscal, as per a credit note it released in August. The gross debt stood at ₹2.27 trillion. Of this, 31% originated from domestic lenders: state-owned banks, private banks and other financial institutions; 28% of the debt was from global banks and financial institutions.
In a related development, Sebi informed the Supreme Court on 25 August that to ascertain suspected non-compliance with minimum public shareholding norms, it has investigated the group’s filings between 1 April 2016 and 30 September 2020. For this, it said dispatched 1,100 emails, 30 letters, and examined 300 documents running into 12,000 pages. Sebi said its report related to the investigation is interim since it involves 13 overseas entities, who were classified by the group as public shareholders, Mint reported on 26 August.
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Updated: 01 Sep 2023, 11:22 PM IST
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