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Adani Group Secures $600 Million Loan Amid Financial Upsurge and Strategic Revamp

Adani Group Seeks $600 Million Loan to Manage Debts, Eyes LNG Expansion

7 May 2024

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Neelesh Bachani

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1.      The Adani group is seeking a $600 million loan from international banks to manage existing debts, specifically for the Dhamra LNG Terminal Pvt, in efforts to restore investor confidence post-scrutiny from Hindenburg Research. This borrowing initiative, expected to be finalized within two months, underscores strategic financial maneuvering.

 

2.      Adani Total Gas reports a substantial increase in net profit and revenue, with net profit surging by 71.6% and revenue growing by 4.7% in the fourth quarter of fiscal 2023-24. Additionally, EBITDA saw a significant surge of 47.6%, reflecting strong operational performance and improved margins.

 

3.      The financial developments align with India's focus on boosting LNG import capabilities to increase natural gas's share in the energy mix to 15% by 2030. Adani Total's engagement in the financial market, including recent bond issuance, showcases resilience and strategic alignment with national energy objectives, emphasizing adaptability and foresight in navigating the dynamic energy sector landscape.

The Adani group is currently in talks with international banks, including Credit Agricole, DBS Bank Ltd., BNP Paribas, Mitsubishi UFJ Financial Group Inc., and Mizuho Bank Ltd., for a loan amounting to $600 million. This loan is intended to manage existing debts and is specifically for the Dhamra LNG Terminal Pvt, a part of Adani Total Pvt. It's anticipated to have three to five years, with interest rates likely to be tied to the Secured Overnight Financing Rate. According to Bloomberg, the borrowing process is slated to be finalized within the next two months. This initiative is part of the group's efforts to restore investor confidence following scrutiny from US short-seller Hindenburg Research last year. Adani Total is a joint venture between Adani and Total Energies.

 

In financial terms, Adani Total Gas has reported a significant increase in net profit for the fourth quarter. The net profit surged by 71.6%, reaching Rs 168 crore compared to Rs 97.9 crore in the corresponding quarter of the previous fiscal year. Revenue from operations also saw growth, increasing by 4.7% to Rs 1,167 crore in the fourth quarter of fiscal 2023-24, up from Rs 1,114.8 crore in the previous year. In terms of operational performance, Adani Total Gas's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the March quarter saw a substantial surge of 47.6% to Rs 299 crore compared to Rs 195.2 crore in the previous year. The margin rose to 24.7% from 17.5% year-on-year (YoY).

 

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The context of these financial developments aligns with the Indian government's strategic focus on enhancing the country's LNG import capabilities. The aim is to elevate the share of natural gas in the energy mix to 15% by 2030, a significant increase from the current 7%. This shift is part of a broader national effort to reduce reliance on more environmentally damaging fossil fuels such as coal and oil. Adani Total's performance, alongside its strategic initiatives such as the Dhamra LNG Terminal project, reflects its alignment with these national energy objectives.

 

Adani Total's successful engagement in the financial market, marked by its recent bond issuance in March, underscores its resilience and credibility despite past challenges. This continued financial maneuvering indicates a proactive approach toward managing debts and funding strategic projects. As the company navigates through both financial and operational landscapes, its performance highlights its adaptability and strategic foresight in the dynamic energy sector.

 

In summary, Adani Total's engagement with international banks for a $600 million loan, alongside its robust financial performance, reflects a strategic alignment with both market demands and national energy objectives. As it continues to pursue growth opportunities and manage its financial obligations, the company demonstrates resilience and strategic acumen in navigating the evolving energy landscape.

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