State Bank of India (SBI) on Monday said the fresh pledge of shares of three Adani Group companies was on account of the requirement to top-up the collateral for its coal mine project in Australia. The lender also clarified that it has not issued fresh loans to the group for the pledged shares. “No additional finance is extended by SBI against such shares pledged,” a SBI spokesperson said in a statement.
Adani Enterprises’ flagship project in Australia is the Carmichael mine and rail project, which aims to produce 10 million tonne per annum in coal, combined with a 200-km narrow gauge rail line through several locations in the country.
A fresh pledge of shares of three companies — Adani Ports & SEZ, Adani Transmission and Adani Green Energy — was reported by SBICAP Trustee last week. With the latest pledge, a total of 1.06% stake of Adani Green, 1% stake of Adani Ports and 0.55% of Adani Transmission of the three companies is encumbered to SBICAP Trustee.
SBI has issued a standby letter of credit facility of $300 million for Adani Group’s Carmichael project in Australia. Additionally, there is a collateral by way of pledge of shares of the three group companies. The required collateral coverage is reviewed at the end of each month and any shortfall on account of mark-to-market (MTM) is required to be complied with, SBI said.
“There have been a top-up each in the months of June and July and the third such top-up was done on February 8 after a review as on January 31,” the spokesperson said.
“It is further clarified that the additional pledge is made by the company to remain compliant to the covenant prescribed for an existing loan which is part of the loans already covered in the total outstanding exposure of the bank,” he added.
The Adani Group recently shelved its Rs 20,000 crore fundraising via a follow-on-offer (FPO) after the shares of the companies took a beating on the stock market after US-based short seller Hindenburg Research alleged various governance issues at the group and stock manipulation by related entities.
SBI’s total exposure to the Adani Group is 0.88% of its loan book, which amounts to around Rs 27,000 crore, SBI chairman Dinesh Khara had said in a recent media briefing. The bank loans issued to the group are for project financing, having tangible assets and adequate cash generation, he had said, adding that the group has been in a position to meet its obligations. Recently, the Reserve Bank of India had put out a note clarifying that loans to Adani Group are within permissible limits. The banking system is now much larger and stronger to be affected by an individual incident or a case like this, RBI governor Shaktikanta Das had said in a post-policy press conference.