Adani Group Plans To Trim Its Capital Spending Plans Amid Hindenburg Row: Report

The Adani Group, after pulling its ₹20,000 crore equity fundraising plan last week due to a stock rout set off by Hindenburg Research’s fraud allegations against the conglomerate, is planning to trim its capital spending plans, Mint reported on Monday citing people close to the development,While providing more collateral in the form of stock pledges to lenders, the group may moderate its capex plans in some of its businesses, the newspaper reported.

“At Adani, there is a rethink on the capex. The group may moderate its capex plans in some of the businesses. So, instead of targeted growth over 12 months, they may look at a time frame of 16-18 months for that quantum of growth in certain businesses,” the newspaper quoted one of the two people as saying.

The conglomerate will return to its usual pace of growth once normalcy returns. It also reported the group might look at 16-18 months for growth in certain businesses, instead of a 12-month target.

The company will use alternative funding channels from internal accruals, promoter equity funding and private placements to fund projects, Mint reported.

The Adani Group generates ₹57,000- ₹60,000 crore of Ebitda yearly, and out of this, around half is available to the group as cash, which the group plans to use for capex, working capital requirements and meeting immediate repayments, which are worth around $300 million over the next six months, the two people added.

On pledges, the move to provide more collateral is after stocks of group companies faced a rout in the market last week after the Hindenburg report levelled allegations of stock manipulation and accounting fraud.

The group will plan to completely reduce its share pledges, the newspaper quoted an executive close to the development as saying.

“The company will pay down all share-backed loans; that will happen very shortly. Second, they will build up more cash buffers in these businesses, they are already very strong, and this will be demonstrated next week when the results are out,” he said.

The market value of billionaire Gautam Adani’s companies has slumped by almost half since Hindenburg Research released a report on January 24 accusing the conglomerate of stock manipulation and accounting fraud. The group has denied Hindenburg’s allegations of corporate wrongdoing and threatened legal action.