Business

Fitch unit warns Adani Group may be careering into a debt trap

Published

4 years ago

2022/08/28

BY S VENKAT NARAYAN
Our Special Correspondent

NEW DELHI, August 27: Indian billionaire Gautam Adani’s ports-to-power conglomerate is “deeply overleveraged,” with the group investing aggressively across existing as well as new businesses, predominantly funded with debt, CreditSights, a Fitch Group unit, said in a report. The aggressive expansion pursued by the Adani Group, led by Asia’s richest person, has put pressure on its credit metrics and cash flow, CreditSights said in the report Tuesday. It cautioned: “In the worst-case scenario,” it may spiral into a debt trap and possibly a default.

“We see little evidence of promoter equity capital injections into the group companies, which we feel is needed to reduce leverage in their stretched balance sheets,” the agency said. It was referring to fund infusions from the Adani Group’s founders, known as “promoters” in India.

All seven listed Adani firms declined by 2% to 7% in trading Tuesday. A representative for the Group did not immediately respond to a request for comment on the report.CreditSights’ report comes after a big few years for Adani, who’s been on a rapid diversification spree, expanding an empire centred on ports and coal mining to include airports, data centres and cement as well as green energy. The group recently pledged to plow $70 billion into renewable projects.

These moves have not only boosted Adani’s stature in India, but his fortune, with his net worth surging past $135 billion this year. He’s also increasingly moving into spheres dominated by the man he replaced as Asia’s richest man, compatriot Mukesh Ambani of Reliance Industries Ltd.

The report puts a spotlight on the multiple fault lines that may impede Adani’s ambitions and the stratospheric surge in the shares of his firms. CreditSights’ analysts, however, said they draw “comfort” from the group’s strong relationships with banks as well as the administration of Indian Prime Minister Narendra Modi.

Some other highlights from the report, authored by CreditSights’ Lakshmanan R, Rohan Kapur and Jonathan Tan are:

The Adani Group is entering new and unrelated businesses, which are highly capital intensive, raising concerns over execution oversight;

Potential strong competition between the group and Ambani’s Reliance to achieve market dominance could lead to “imprudent financial decisions;”

Adani Group is also exposed to moderate levels of governance and ESG risks

The group has a “strong track record of churning out strong and stable companies” through its flagship, Adani Enterprises Ltd., and has built a portfolio of “stable infrastructure assets tied to the healthy functioning” of the Indian economy;

Its founder “enjoys a strong relationship” with the Modi government and has benefited from “policy tailwinds;”

CreditSights remain “cautiously watchful” of the group’s growing appetite for expansion, which is largely debt-funded.

A self-made billionaire who started his business as an agri-trading firm in late 1980s, Adani has also been a busy dealmaker this year. The Adani Group acquired the Haifa port in Israel in July for $1.2 billion and Swiss firm Holcim’s Indian cement units for $10.5 billion in May, besides almost three dozen big and small acquisitions. It’s also expanding into media, health care and digital services.

The group owns India’s largest private sector port operator, coal miner, city gas distributor and airport operator and is aiming to create the world’s largest renewable power generator.

Investors have cheered the tycoon’s ability to rapidly scale up his businesses, spurring massive share rallies in Adani firms even during the pandemic, when most businesses suffered. Adani Enterprises and Adani Green Energy Ltd. have surged more than 1,300% since the beginning of 2020. Adani Total Gas Ltd. has rallied about 1,900% and Adani Transmission Ltd. over 900%, while the benchmark S&P BSE Sensex surged almost 42% over this period.

But it’s this breakneck growth that’s making credit watchers, including CreditSights, uneasy. The research firm acknowledges that the Adani founding family’s status as a majority shareholder in most of their listed group companies means they will go all out to support them.

The family’s “entire fortune and reputation is tied to the Adani Group companies,” it said. “Having such major ‘skin in the game’ could imply that the family would pull all stops to avoid default in any of the entities, since any material liquidity or solvency issue in one company would likely have a contagion effect on the valuation of the remaining companies, too.”

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Business

Sri Lanka secures IMF staff-level deal for USD 700 million tranche

Published

14 hours ago

2026/04/10

Thilina Walpola

Sri Lanka has reached a staff-level agreement with the International Monetary Fund to secure the next tranche of funding under its ongoing bailout programme, marking a key step in the country’s fragile economic recovery.

The agreement, announced this week, will enable Sri Lanka to access approximately USD 700 million, subject to approval by the IMF Executive Board. The funds form part of the USD 2.9 billion Extended Fund Facility (EFF) programme agreed following the 2022 economic crisis.

The latest development covers the combined fifth and sixth reviews of Sri Lanka’s reform programme, indicating that the country has made sufficient progress to move forward, while highlighting the need to sustain reform efforts.

Sri Lanka’s economy has shown signs of stabilisation in recent months, supported by improved revenue collection, easing inflation, and a gradual buildup of foreign reserves. However, the recovery remains vulnerable to both domestic and external pressures.

By Ifham Nizam

Business

Israeli attack on Lebanon triggers local stock market volatility

Published

14 hours ago

2026/04/10

Thilina Walpola

Initially CSE trading was somewhat volatile despite the ceasefire in West Asia but it experienced further volatility after Israel attacked Lebanon yesterday.

However, the IMF delegation which is now in Sri Lanka to release two tranches of its relief package created some positive sentiments for the market, analysts said.

The All Share Price Index went down by 73.06 points, while the S and P SL20 rose by 10.57 points.

Turnover stood at Rs 2.96 billion with six crossings. Those crossings were: JKH 5.5 million shares crossed to the tune of Rs 807.6 million and its shares traded at Rs 19.70, CIC Holdings two million shares crossed for Rs 54 million; its shares traded at Rs 32, Access Engineering 600,000 shares crossed for Rs 44.4 million; its shares traded at Rs 74, Central Finance 116,000 shares crossed to the tune of Rs 27.5 million ; its shares sold at Rs 237, LMF 250,000 shares crossed for Rs 22.8 million; its shares fetched Rs 91.10 and Kelani Cables 200,000 shares crossed for Rs 21 million and its shares traded at Rs 105.

In the retail market seven companies that mainly contributed to the turnover were; Dialog Rs237 million (7.5 million shares traded), LMF Rs 203 million (22 million shares traded), Colombo Dockyard Rs 199.7 million (1.1 million shares traded), HBA Foods Rs 163 million (18.5 million shares traded), JKH Rs 156 million (7.8 million shares traded), JKH Rs 156 million (7.8 million shares traded), Softlogic Holdings Rs 117 million (9.6 million shares traded) and Acme Printers Rs 107 million (15.6 million shares traded). During the day 133.3 million share volumes changed hands in 23666 transactions.

It is said that manufacturing sector counters, like JKH, performed well, while food sector counters, especially LMF and HBA Foods, performed well. Other sectors too performed somewhat well during the day.

Yesterday the rupee was quoted a Rs 315.42/48 to the US dollar in the spot market from 315.30/40 the previous day, dealers said, while bond yields were quoted higher.

By Hiran H. Senewiratne

Business

HNB Assurance marks 25 years with strategic transformation to ‘HNB Life’

Published

14 hours ago

2026/04/10

Thilina Walpola

Highlights from the new brand reveal as HNB Assurance transforms into HNB Life

Marking 25 years of trust, growth, and service excellence, HNB Assurance PLC has unveiled its new corporate identity, transitioning to HNB Life PLC a strategic evolution that reflects the company’s forward-looking vision and commitment to empowering lives with protection and the freedom to thrive, no matter where life takes them.

This milestone signifies more than a change in name or visual identity. It represents a deliberate transformation shaped by strong performance over the past few years, during which the company has achieved remarkable growth, strengthened its market position and enhanced its customer-centric capabilities.

The newly introduced logo, inspired by the form of a wing, symbolises HNB Life’s role as a proactive enabler. It reflects the organisation’s commitment to supporting individuals in navigating life’s journey with confidence, empowering them to pursue their aspirations and live life on their own terms.

The official unveiling took place at a launch event attended by key stakeholders, strategic business partners, well-wishers and employees.

Addressing the gathering, Chairman, Stuart Chapman highlighted the significance of this transformation, stating, “As we mark 25 years of progress, the transition to HNB Life reflects our strategic intent to evolve with the changing needs of our customers and the broader market. This new identity embodies our purpose, to enable and empower individuals to achieve what they truly aspire to in life, with confidence and security. As a company we are extremely excited on what the future holds for as, as we build on an incredible foundation laid over the past two and a half decades.”

The new Vision of the Company is “To be the leader in empowering lives with protection and freedom to thrive, no matter where life takes them”.