S&P Global Ratings has placed Adani Transmission’s (ATL’s) environmental, social and governance (ESG) evaluation ‘under review’, following allegations of governance issues, which may affect appetite of fund providers and business partners.
“We will closely monitor developments, including any investigations by the Indian regulators and any additional disclosures by the Adani group. The allegations related to group governance and disclosures may affect the appetite of fund providers and business partners in supporting ATL’s growth. This may raise financial and operational risks for the company,” the global ratings agency said in a report on Thursday.
“Our current assessment of ATL’s governance factors in some controlling shareholder’s weight in decision-making, including on related-party transactions. Common parentage and name-sharing also expose ATL to reputational risks from the wider Adani group,” it added.
The rating agency intends to complete its ESG Evaluation review in the coming months, then it will assess the implications of the allegations.
ATL is the largest private power transmission and distribution company in India. The Adani family controls the company with a reported 75% stake, with the balance in free float. In the fiscal ended March 31, 2022, ATL operated 18,795 circuit km of electric transmission lines. The company had a total transformation capacity of 40,001 megavolt amperes. It owns a 500-megawatt coal-fired power plant.
On January 24, US-based Hindenberg Research claimed there are significant governance issues in the Adani group. Many allegations relate to disclosures and actions at the shareholder level. Since then, equity and bond prices have plummeted for the group’s entities, including that of ATL, S&P said.
The report outlines numerous issues of suspected fraud at the Adani Group, the second-largest conglomerate in India run by the world’s then third-richest man. Following the report, the market cap of Adani group has crashed to nearly `9.25 trillion from the earlier `18.5 trillion.
Later, Adani released a 413-page response denying all allegations and terming Hindenberg as ‘Madoffs of Manhattan’.
Later on February 7, Adani Group companies said it will appoint independent firms to evaluate compliance and regulatory issues following the Hindenberg report that resulted in Adani Enterprises withdrawing its `20,000-crore follow-on public offer and listed firms losing market capitalisation.