How could Hindenburg be the reason for Gautam Adani’s loss? Hindenburg report is nothing but the same as a patient’s CT Scan, MRI, and pathological reports. Those reports can not be the reason for someone falling sick. These reports just tell the exact condition of the patient’s health. It is just that every Tom, Dick, or Harry may not be able to understand the report, for that one need to be a radiologist or a pathologist. Hindenburg report reveals the financial health of the Adani Empire, nothing less- nothing more. Ideally government of India should have obtained such a report long back like a loving husband or a loving wife would be concerned about their spouse and take them to the best hospital in the nation and if required to abroad for proper diagnosis and treatment. People die because of their disease not because of their medical report. So please don’t hold Hindenburg responsible for Adani’s loss. It was bound to happen. Adani’s fall is inevitable, nothing can stop that. It might sound harsh but the reality is that the earlier it happens the better. The longer he manage to sustain his empire the bigger the damage will be for the nation. Because he will keep on borrowing from the PSU bank and LIC-like organizations. Knowing his clout no bank will be able to say no to him. And if one of the bank CMDs manages the guts to say no, he will be kicked out or ED & CBI will be after him.
One of my colleagues was admitted to a top super-specialty hospital for almost seven months. His entire savings were exhausted. His family sold their, jewellery, cars house to manage his treatment cost. They did everything possible they could do. But couldn’t save him. However, in the process, they lost everything.
The stakes of the nation over Gautam Adani are very very high. Adani Group's combined borrowings jumped 40.5 percent to about Rs 2.21 lakh crore in the financial year 2021-22. In June,22 itself the debt-ridden company raised a fresh loan of ₹6,071 crores from a consortium of banks led by the State Bank of India (SBI) for the first phase of the Kutch Copper Limited project. Meanwhile, alone for the Navi Mumbai International Airport (NMIAL) project, Adani has raised a Rs 12,770-crore loan from the State Bank of India (SBI) in 2022. All the commercial banks have now gone tight-lipped about the loan amount provided to the Adani group.
Among the group entities, Adani Power and Adani Wilmar saw a decrease in their borrowings. Adani Power’s borrowing during the financial year 2021-22 stood at Rs 48,796 crore, a fall of 6.9 percent as compared with Rs 52,411 crore a year ago. Adani Wilmar witnessed a drop of 12.9 percent in its borrowing to Rs 2,568 crore in 2021-22, against Rs 2,950 crore in the previous financial year, according to the data.
Adani Green Energy’s borrowing during the financial year increased 118.6 percent to Rs 52,188 crore, compared with Rs 23,874 crore in 2020-21. The debt of Adani Ports and SEZ rose 32.1 percent to Rs 45,453 crore, from Rs 34,401 crore a year ago. Adani Transmission saw an increase of 10.6 percent to Rs 29,815 crore as compared with Rs 26,961 crore in the previous year, whereas Adani Total Gas’ borrowing jumped 103.9 percent to Rs 995 crore in 2021-22 from Rs 488 crore a year ago, the data showed.
The group’s gross debt-to-equity ratio was at a four-year high of 2.36 at the end of March, an increase over 2.02 a year ago and a low of 1.98 at the end of FY19. And this is despite a massive hike in his equity price over the last two years. However what is shocking is that, despite this Adani Enterprise Limited’s credit rating has been upgraded to A+ for long-term credit lines and to A1+ highest rating for short-term credit facilities by CARE ratings. Quite impressive. Can you imagine how these credit rating agencies are misleading the nation at the behest of Adani? It's like fooling your family that you don’t have diabetes and you can go not having sweets as much as you want.
The point is that with so much money of the nation at stake, Gautam Adani is the most important person in the nation. I feel he is more important than the PM. Because God forbid if something happens to him the nation will lose 2.20 lakh crores of public money. Plus fresh loans are constantly being approved. People would remember that sometime back Adani was provided with Z-category security. His safety and security should be of primary concern to the nation. The government should ensure that he remains protected by all possible means. Secondly, with Z category security the government is supposed to be aware of all his movements, he can not escape like the others. At least the government will not be able to wash off its hands.
The biggest risk is that Adani's loans are unsecured. His debt-to-equity ratio is abnormally skewed. When your Debt to Equity ratio is 2.36, where is the security of the loan amount? What does the 2.36 ratio means? This means that if the total group equity value is Rs.100/- then your total debt is Rs.236/- The next question comes then where the loan amount gone if it has not been spent to build up asset and enhance equity value? I am sure that his debt to assets in real time value will be further worse. But he is managing to get higher credit ratings making him qualified to get fresh loans. RBI should have already flagged his debt into red zone and thoroughly audit his loan portfolio as well get Adani assets audited by some internationally reputed audit firms. But our dear RBI governor must be sleeping over a pile of notes, putting a thick layer of cotton in his ear, his eyes are closed obviously since he has been sleeping God only knows since when. There are some lucky employees who are paid a fat salary and all the perks just for sleeping. In a years time, he has to pay back some of his bonds which he would not be able to pay unless he raises fresh loans. The stock selling option would not be there with him since the price has already crashed and if he try to offload a large volume of stock in the market the price will further crash. Raising fresh loans against his existing venture wouldn’t be possible. Possibly he may try to start new-new venture and ask loan against them. Ideally, SEBI should not allow him to raise any fresh FPO or IPO unless Adani ventures show good results in their bottom line. (FPO abbreviated as Follow-on Public Offer is a process in which an existing company listed on the stock exchange issues new shares to the existing shareholders or to the new investors. It is different from an IPO where the company issues its shares to the public for the first time to collect funds in order to grow their business.) The government & RBI should advise the banks not to extend fresh loans to Adani.
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