Adani Enterprises faces risk of Rs 11,574 crore unsecured loan recall by banks

Adani Enterprises and its subsidiary companies have taken out unsecured loans totalling Rs 11,574 crore, which are now at the risk of being recalled by banks and financial institutions.

Though there is no material change in the company's financial performance, the recent allegations made by short-seller Hindenburg Research against the Adani Group have already led to a significant change in the market's perception of the Adani Group companies.

Adani Enterprises, which acts as a holding company, closed the last financial year with consolidated revenue of Rs 70,432 crore and net profit of Rs 787 crore.

The total market capitalisation of the nine Adani group listed companies, including Ambuja and ACC Cement, has eroded by almost half to $100 billion in a matter of seven trading days. 

Adani Enterprises alone have seen massive market cap value erosion.

The group's recent decision to abruptly withdraw its Rs 20,000 crore follow-on-public offer (FPO), which was partially paid and fully subscribed by non-retail investors, has created new challenges, especially in mobilising additional resources.

According to a disclosure to investors , the company had disclosed in its FPO document that "these loans may not be repayable in accordance with any agreed repayment schedule and may be recalled by the lender at any time."

The company had disclosed this information as one of the risk factors. "In the event that the lender seeks repayment of any such unsecured loan, our company and our subsidiaries would need to find alternative sources of financing, which may not be available on commercially reasonable terms, or at all. As a result, any such demand may materially and adversely affect our business, cash flows, financial condition and results of operations," it stated. 

A mail sent to company for a response remained unanswered. 

A part of the FPO money, amounting to Rs 10,869 crore, was supposed to be deployed in several projects: the green hydrogen ecosystem, improvement works at certain existing airport facilities especially Ahmedabad Airport Project, and the construction of a greenfield expressway under its road and highway subsidiary.

In the event that the lender seeks repayment of any such unsecured loan, the company and its subsidiaries will need to find alternative sources of financing. 

Gautam Adani, Chairman of Adani Enterprises Ltd, has gone on record saying that the group's balance sheet is very healthy with strong cashflows and secure assets. "We have an impeccable track record of servicing our debt. "This decision (to withdraw the FPO) will have no impact on our current operations or future plans," Adani stated.

"We will continue to focus on long term value creation, and growth will be managed by internal accruals. Once the market stabilises, we will review our capital market strategy. We are very confident that we will continue to get your support. Thank you for your trust in us," added Adani.

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