Banks are asking the Adani Group to put their expansion plans on hold until the stock-rout crisis triggered by the Hindenberg report blows away.

While banks are willing to continue with the sanctioned pipeline, opening the tap for new loans to the group will be difficult at this juncture. 

Bankers want the group, which has grown on the back of a mountain of debt,to stay away from expansion projects. They say the group should consolidate its businesses and shed some of the flab till the debt situation improves.

Bankers say they are closely watching the developments and admit the situation is fluid. The Reserve Bank of India (RBI) is also getting a feedback from the banks on their loan exposures to the group and is keeping an update on the developments.

The Adani group has a gross aggregate debt of around $30 billion and a net debt of $26 billion. It has reportedly about $9 billion debt exposure to the domestic banks on a sanctioned basis.

The State Bank of India (SBI) has a loan exposure of Rs 27,000 crore (0.9% of its total loan book) while Punjab National Bank’s (PNB) is Rs 7,000 crore (0.9%) and Bank of Baroda’s Rs 5,400 crore (0.6%) to the Adani Group entities. As per Morgan Stanley’s research report, Axis Bank has an exposure of Rs 7,200 crore (0.9%), IndusInd Bank Rs 4,200 crore (1.5%) and IDFC First Bank Rs 900 crore (0.6%).

Despite the Adani entities shedding $140 billion of market value at one point of time since a January 24 report by Hindenburg Research alleging stock manipulation and improper use of tax havens, Indian banks have  said that they would continue to support the embattled group.

Indian banks feel that the situation has not gone out of hand and assets of the Adani group are still solid. They say they shouldn’t be having a major problem as they have lent against tangible assets and adequate cash flows. Their loan exposure to the Adani group is also within the Reserve Bank of India’s regulatory limits.  

Earlier, Jugeshinder Singh, group chief financial officer, had said at a post-earnings call that Adani Enterprises Ltd (AEL) would not invest in any new projects where it has not made capex commitments as the company looks to ride out the current “market volatility’’.

AEL, the flagship company of the group, had called off its Rs 20,000-crore follow-on public offer (FPO) after it had got oversubscribed amid the “unprecedented situation and the current market volatility”.

Adani also called off the acquisition of DB Power, a  1,200-megawatt coal-fired power plant in Janjgir Champa district of Chhattisgarh, for Rs 7,017 crore.  The deadline to complete the transaction was allowed to expire on February 15, 2023.

As part of an effort to boost investor confidence, the group is holding a fixed-income roadshow this week in Singapore and Hong Kong.