Adani to halt some investments, focus on current projects | Mint
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Business News/ Companies / News/  Adani to halt some investments, focus on current projects
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Adani to halt some investments, focus on current projects

Adani has also called off its planned acquisition of the thermal power assets of DB Power in February

In December 2021, group flagship Adani Enterprises Ltd launched Adani New Industries to incubate, build and develop a large integrated platform to produce green energy. (REUTERS)Premium
In December 2021, group flagship Adani Enterprises Ltd launched Adani New Industries to incubate, build and develop a large integrated platform to produce green energy. (REUTERS)

The Adani group has told domestic lenders that it will pause some of its proposed investments, especially those without funding commitments, and focus on the ones where work has already started, said two people aware of the development.

Some of the projects the group has decided to delay are under Adani New Industries Ltd, a company set up to expand the group’s renewable energy initiatives. Lenders said that the shift in strategy came after France’s TotalEnergies put on hold its plan to buy a 25% stake in Adani New Industries.

“Adani Group’s solar module manufacturing business was supposed to get a chunk of the 20,000 crore follow-on public offering proceeds, which was called off due to stock volatility despite being fully subscribed. The group wanted to give this business a fillip, but that won’t happen now. This business will continue at its usual pace," said one of the people cited above.

Adani has also called off its planned acquisition of the thermal power assets of DB Power Ltd in February.

“This was part of the group’s discussions with senior bankers immediately after the stock volatility in the wake of the Hindenburg report," the second person said, also requesting anonymity.

Bankers, the person said, were told that the group would focus on executing existing projects and deleveraging themselves. The person said that bankers were also shown a snapshot of lender-wise exposure of the group, showing utilized and total committed credit data, along with other upcoming repayments.

“Lenders were assured that by going slow on certain plans, companies in the group would make sure they deliver existing projects on time," the person said.

An email sent to an Adani group spokesperson remained unanswered.

In December 2021, group flagship Adani Enterprises Ltd launched Adani New Industries to incubate, build and develop a large integrated platform to produce green energy. According to Adani Enterprises’s annual report in FY22, Adani New Industries plans to assist the nation’s transition from an importer of fossil fuel energy to a green energy nation with an investment of $50 billion across the decade.

Like Reliance Industries, the Adani Group is also in the race to become a standout new energy company. While RIL has committed $10 billion over the next three years, the Adani group has committed investments of $70 billion over the next decade. The first person said that as a fresh strategy, the Adani Group would not enter any new business for the time being and would keep some of the originally planned investments in new ventures on hold.

“Around 4,000-5,000 crore from the FPO proceeds were supposed to be used to run new business under Adani New Investments and a few other planned ventures. Capex outlay for these new businesses may be trimmed now as the primary focus for the moment has changed now," the first person said.

On 6 February, Mint reported that the Adani group plans to trim its capital spending, a report the group denied. Then on 13 February, Bloomberg also reported that the conglomerate plans to hold off fresh capital expenditure.

“Now, the group will use funds primarily for debt repayment and maintenance capex rather than for the renewable energy business that is housed under Adani New Industries," the person said.

It may be a bit challenging for the group to implement these plans within the original timeframe, the person said. As Mint reported earlier, at the group level, Adani generates around 57,000-60,000 crore from operations, and half of this is available as cash in its books, which could be used to repay debt. The group has already repaid over 11,000 crore over the past month and raised another 15,446 crore from US-based boutique investment management firm GQG Partners by offloading some promoter stakes. “While the FPO amount was supposed to speed up the expansion of the new business ventures, which will be delayed, these businesses will continue to remain in Adani’s focus," the person said.

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ABOUT THE AUTHOR
Shayan Ghosh
Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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Published: 12 Mar 2023, 10:50 PM IST
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