In the aftermath of the release of the Hindenburg report, Adani Group is looking to trim its capital spending plans, according to a Mint report. Additionally, the company will use the cash in hand for capex and to meet payment deadlines, amounting to $300 million over the next six months.
The Indian company led by mogul Gautam Adani will widen its time horizon for growth in certain businesses and use alternative funding channels from internal accruals, promoter equity funding and private placements to fund projects.
“At Adani, there is a rethink on the capex. The group may moderate its capex plans in some of the businesses. So, instead of targeted growth over 12 months, they may look at a time frame of 16-18 months for that quantum of growth in certain businesses,” one of the sources was quoted as saying by the publication.
The decision to curb spending plans comes data after Adani Group called off its $2.5 billion share sale. Gautam Adani, in a video released, said the decision was taken with the interest of investors in mind.
“In my humble journey of over 4 decades as an entrepreneur, I have been blessed to receive overwhelming support from all stakeholders particularly the investor community. It is important for me to confess that whatever little I have achieved in life is due to the faith and trust reposed by them.”
“For me, the interest of my investors is paramount and everything else is secondary. Hence to insulate the investors from potential losses we have withdrawn the FPO.”
Before its cancellation, Adani Enterprises’ follow-on public offering, India’s largest follow-on share sale, was fully subscribed. It included a $400 million investment from Abu Dhabi-based diversified conglomerate International Holding Company.
However, after the Hindenburg report came out, Adani and its affiliate companies have lost more than $100 billion in market value. Furthermore, the company, last week shelved its plans of releasing over $122 million in funds through the first-ever public sale of bonds.
The Hindenburg report, in nutshell, accused the Adani group of stock manipulation using tax havens whilst having unsustainable debt.
On Budget day, February 1, shares of Adani Enterprises crashed 34.72 per cent to hit a day low of Rs 1,942. The share has tanked further since then and is currently trading under Rs 1600.
India’s main opposition parties on Monday kicked off planned protests at state-run companies such as LIC and SBI which had invested a considerable amount in the Adani Group.
(With inputs from agencies)
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