Adani Group has pledged additional shares in favour of SBICAP Trustee as the group companies are required to maintain 140 percent collateral security coverage as per one of the covenants relating to existing loan and hence the top up, State Bank of India said on Monday.

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In an exclusive interview with CNBC-TV18, Swaminathan J, MD Corporate Banking and Subsidiaries at SBI, said, "We have an exposure of $300 million facility that was granted for the Adani Group's Carmichael facility in Australia, of which it has drawn down $180 million towards the railroad part of the project while the mines it has so far managed to complete with its own resources. One of the covenants for this facility is that they should maintain 140 percent collateral coverage in addition to the project assets."

This development came after Adani Ports and Special Economic Zone (APSEZ), Adani Transmission Ltd and Adani Green Energy pledged shares to SBICAP Trustee Company, a unit of India's biggest lender, SBI over the weekend.

Swaminathan J clarified that this was not a new loan granted against pledge of shares but a top up of collateral to maintain covenants relating to existing loan to the Gautam Adani-led group.

The senior SBI official added that the Carmichael Project is already operational and generating cash and that the public sector lender keeps certain additional collateral beyond project assets when the project is in implementation.

He said, "Our book as of the end of December was Rs 31.5 lakh crore is our total advances. So, 0.88 percent translates to something little lower than Rs 27,000 crore... that is well below the large exposure framework that is permitted by Reserve Bank of India (RBI) and covers both fund-based and non-fund-based outstanding pertaining to this group."

SBI doesn’t see any challenge with respect to servicing of any loans by the Adani group and so there was no need to discuss it at this point in time and that it will take it up if the need arises, Swaminathan said.

He said the group as a whole has got adequate strength and surplus cash flow. In case there is any additional funding requirement towards any one of the projects or delay in cash flow generation, SBI is confident that groups like these ensure group and parent-level support.

Swaminathan pointed out that the bank conducts a routine review of exposures on a monthly basis and does not see any concern on its exposures as of now.

"We have a system by which this covenant is reviewed, and any shortfall that occurs on account of moment in the value of these stocks, the number of shares are required to be topped up to ensure an all-time coverage of 140 percent. So this is an activity that we do every month and we have been doing it ever since this facility was extended sometime in May 2022," he explained.

Also, the Adani Group hasn't approached it yet to refinance any international loan, he said.

Also Read: Adani Group stocks in focus: Adani Ports, Ambuja Cements out of ASM framework, Moody's cuts outlook on 4 firms

Swaminathan's comments came against the backdrop of a US-based activist short-seller Hindenburg Research report that made a litany of allegations, including fraudulent transactions and share price manipulation at the Gautam Adani-led group.

In afternoon deals, Adani Group stocks traded with major cuts with all group companies’ stocks down more than five percent. Adani Ports and Ambuja Cements nearly five percent off highs.

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(Edited by : Abhishek Jha)

First Published:Feb 13, 2023 1:30 PM IST