Adani-Hindenburg Saga: Zee Business unravels Gautam Adani group's exposure to banks, financial institutions

As the Adani-Hindenburg saga plays itself out, the focus has turned to the overall debt of billionaire Gautam Adani Group companies and its exposure to Indian banks and financial institutions. The US-based forensic financial audit firm Hindenburg Research has alleged Adani Group of stock price manipulation and fraud, last week.

Since the report was published, Adani Group companies' stocks have witnessed a severe beating at the hands of the investors resulting in the erosion of the market capitalisation of the companies by more than 4 lakh crore in the previous two sessions.

According to Zee Business research, Adani Group has a total debt of around Rs 1.9 lakh crore, of which between Rs 70,000 and 80,000 crore is accounted by domestic banks.

Also Read: Hindenburg research report on Adani: Know the man who rattled Asia's richest man and Indian stock market; Hindenburg's past targets and more

Though the group’s debt has doubled in the last three years, its exposure to Indian banks has reduced to 40 per cent from 86 per cent in the financial year 2015-16 (FY16), as per Zee Business research.

Of 40 per cent exposure, the share of private banks, is less than 10 per cent, while public sector banks account for 25-30 per cent and about 18 per cent of the group’s total debt is from foreign banks.

Most of the incremental funding to the group for new businesses and acquisitions has come through overseas sources, according to a global brokerage firm CLSA.

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“The ballpark exposure of private banks is 0.3 per cent of FY24 loans and 1.5 per cent of FY24 net worth. For PSU banks, the exposure is 0.7 per cent of FY24 loans and 6 per cent of FY24 net worth," as per CLSA.

According to CLSA, bank debt, which includes term loans, working capital, and other facilities, forms 38 per cent of the total debt, while bonds/CP (commercial papers) constitute 37 per cent and 11 per cent is borrowing from financial institutions while remaining 12-13 per cent is inter-group lending.

Also Read: Adani Group hits back at Hindenburg, calls allegations attack on India

Large acquisitions, such as cement, have been fully funded by foreign banks, the brokerage also noted in its report on the group’s exposure to banks.