- Friday, April 19, 2024
By: Shubham Ghosh
The Adani Group is considering trimming its capital spending plans after pulling its equity fundraising plan worth Rs 20,000 crore (£2 billion) last week in the wake of a report by Hindenburg Research’s fraud allegations against the conglomerate triggered a stock rout, India’s Mint newspaper reported on Monday (6) citing sources.
The report added that the group, while providing more collateral to lenders in the form of stock pledges, may moderate its capex plans in some of its businesses.
“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 Mint quoted one of the sources as saying.
The conglomerate is set to return to its usual pace of growth once normalcy is restored.
It also reported that the business group might look at 16-18 months for growth in certain businesses, instead of a 12-month target.
The Mint report said that the company will use alternative funding channels from internal accruals, promoter equity funding, and private placements to back projects financially.
The Adani Group generates Rs 57,000 (£5.7 billion)-Rs 60,000 crore (£6 billion) of Ebitda a year. Out of this, around half is available to the group as cash, which the group intends to use for capex, working capital requirements and meeting immediate repayments, which are worth around $300 million over a period of six months, the two sources added.
The group will plan to completely reduce its share pledges, the Mint 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,” the person said.
(With agency inputs)
