NEW DELHI: Yet another rating agency has raised flags against the high debts of Adani Group. S&P Global Ratings on Thursday said that Asia’s richest billionaire Gautam Adani’s group, which has grown on acquisitions, has fairly solid fundamentals but debt-funded future acquisitions can start putting pressure on ratings.
“If you look at the rated entities (of Adani group), like Adani Ports, their business fundamental is fairly solid. Port business is generating healthy cash flows. Where, probably, the risk could lie for the group is, some of the acquisitions it is doing. Some of the recent acquisitions that we are seeing are largely debt-funded and that is taking away the headroom,” S&P Global Ratings Senior Director (Infrastructure Ratings) Abhishek Dangra said at a webinar.
He added any future acquisition that the group does at the current pace can start putting pressure on its ratings. Adani Group recently forayed into the cement sector with a USD 10.5 billion acquisition of Holcim’s India units (ACC and Ambuja Cemennt), and plans to set up a 4.1 mtpa integrated alumina refinery and a 30 mtpa iron ore beneficiation plant in Odisha that could cost over Rs 58,000 crore among other things.
Most of this expansion has been funded by debt. The Group’s combined gross debt reached a new high of Rs 2.22 lakh crore at the end of FY21-22, up 42 per cent from Rs 1.57 lakh crore a year ago. “Currently we see that the risks can be managed if the group manages the growth ambitions or the fundings,” said Dangra.