Adani Ports to Pay Off $605m Debt, Capital Spending Halved

Adani Ports & Special Economic Zone Ltd. will repay debt of about 50 billion rupees ($604.6 million) as Gautam Adani takes steps to improve leverage measurement and corporate governance of his companies following a short seller attack that put his financial health under scrutiny. .

Repayment in the year beginning in April will improve the net debt-to-earnings before interest, tax, depreciation and amortization ratio to about 2.5 times, the company said in a statement Tuesday. The ratio currently amounts to a little more than 3 times.

India’s largest private-sector port operator, which reported a revenue shortfall in the latest quarterly results, also said it would cut capital expenditure by about half in the next financial year, by compared to the current year.

“To uphold the principles of good corporate governance, the management of Adani Group entities is considering the appointment of independent firms/agencies” to review regulatory compliance issues regarding related party transactions and internal controls, among others, according to documents filed by Ambuja Cements Ltd. and Adani Green Energy Ltd., both part of the ports-to-power conglomerate. “Management will assess the necessary actions required, if any.”

The developments come just a day after the billionaire and his family prepaid $1.11 billion in equity-backed loans from three group companies, including Adani Ports, to allay investor fears. The conglomerate’s finances have come under scrutiny after US short seller Hindenburg Research brought charges of accounting fraud and market manipulation at the Adani Group, wiping out more than $100 billion from its market capitalization.

The Adani Group has repeatedly denied the charges.

“Soothing Concerns”

Adani Ports’ guidance “may ease concerns about the company’s liquidity and debt, although governance and regulatory risks are likely to linger,” Bloomberg Intelligence analyst Sharon Chen wrote. “It could also provide reassurance that it will not significantly increase related party lending to support the rest of the group as free cash flow has been earmarked for debt repayment.”

Listed companies of the Adani conglomerate, which was forced to suspend a $2.5 billion share sale by its flagship Adani Enterprises Ltd. last week as short-seller allegations sparked a massive rout in stocks, began reporting December quarter results this week as investors search for clues. on the soundness of business operations.

Adani Ports reported a 16% drop in profits to 13.2 billion rupees for the last quarter, missing analysts’ estimate of around 15 billion rupees. Revenues were up 18% from the prior year period to Rs 47.9 billion but were also below estimates. Capital expenditure for the year commencing April is set between Rs 40 billion and Rs 45 billion.

Sister companies

Billionaire Adani’s two other companies that reported earnings on Tuesday are showing strong earnings growth.

Earnings at Adani Green Energy, one of the conglomerate’s most indebted companies, more than doubled to 1.03 billion rupees from 490 million rupees in the same quarter last year. Total revenue jumped 54% to 22.6 billion rupees while total costs rose 45%, the company said in an exchange filing. The renewable energy company is on track to complete 8,300 megawatts of capacity by March, she said, adding that covenants are within stipulated limits.

Ambuja Cements, the larger of two local cement companies the Adani Group acquired last year from Holcim Ltd., posted a bigger-than-expected quarterly profit of 3.69 billion rupees, up 46% from to the period of the previous year. Revenue rose 10% and matched estimates of 41.3 billion rupees, according to a separate filing.

The cement maker remains debt-free and expects “cement demand to continue to grow over the coming quarters on the back of increased infrastructure activity,” its chief executive, Ajay Kapur, said in the filing.

Adani Transmission Ltd. posted a net profit on Monday as net profit jumped 78% – the only other company in the group to report results so far.

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