Adani Group’s corporate governance practices have come under intense scrutiny after US authorities filed bribery charges against key executives of Adani Green Energy Ltd (AGEL). Following the indictment, Fitch Ratings placed Adani Energy Solutions Limited (AESL) and Adani Electricity Mumbai Limited (AEML) on “Rating Watch Negative”, indicating a possible downgrade to their ‘BBB-‘ ratings.
The US indictment raises concerns.
The allegations, which include allegations of bribery and misleading investors during the 2021 offshore note offering, have raised serious questions about governance at the Adani group. Two of the accused board members are linked to Adani’s founding family, raising concerns about contagion risks spreading across the group.
Fitch cited “rising corporate governance risks” and potential funding challenges as key drivers for the rating action. “The conviction or indication of weaknesses in governance practices could significantly pressure the rating,” Fitch said.
Liquidity remains intact, but access to future funding is at risk.
Fitch noted that AESL and AEML currently maintain strong liquidity. AESL’s recent USD 1 billion facility placement ensures that it can fund near-term capital expenditure, while allowing AEML to pass on operating and borrowing costs. It benefits from However, Fitch warned of medium-term funding risks: “Increased reliance on onshore funding could increase refinancing risks and increase borrowing costs.”
The global implications are widening.
The impact of the indictment has prompted action by global stakeholders. Total Energy has halted investments in Adani projects, and ESG rating provider Morningstar Systemalytics announced plans to review Adani Green’s risks.
Adani dollar bonds, which had earlier seen sharp declines, were steady on Tuesday. Analysts remain cautious, however. “This result underscores the importance of strong governance for any investment,” said Hortense Baio, Head of Sustainable Investments at Morningstar.
What’s next for Adani?
The Fitch report highlights that the USDINR pair could face pressure if capital inflows are restricted and borrowing costs rise, especially when funding is tight amid rising government risks. Access becomes a major concern for Adani affiliates.
Adani Group has vehemently denied the allegations, calling them “baseless” and vowing to seek legal remedies. However, as global scrutiny tightens, the group’s reputation and financial future hang in the balance.