Punjab National Bank has a total exposure of Rs 7,000 crore to Adani Group, but there is currently no worry pertaining to those accounts, the state-run lender’s managing director and chief executive said on Monday.
Last week, US short-seller Hindenburg Research flagged concerns about Adani Group’s debt levels and the use of tax havens. Adani Group has said that it complies with all local laws and has made the necessary regulatory disclosures.
“Out of Rs 7,000 crore, around Rs 2,500 crore is related to Adani’s airport business,” PNB CEO Atul Kumar Goel told reporters at a virtual press conference after the company’s quarterly results.
“Whatever the exposure we are having is backed by cash flow.”
However, the bank is keeping a “close eye” on the developments pertaining to the news flow around Hindenburg’s research report, Goel said.
The bank has not given any loan to the Adani Group by pledging shares, he added.
Punjab National Bank reported a 44% drop in net profit for the October-December quarter due to rising provisions for bad loans.
The lender’s asset quality improved, with gross non-performing asset ratio at 9.76% as of end-December, compared with 10.48% at the end of the prior quarter.
Its net NPA ratio was at 3.30% as of the end of December.
Goel said the bank is targeting a gross NPA ratio of around 9% and net NPA ratio of 3% by March-end. The bank is targeting credit growth of 12-13% and deposit growth of 8-9% for 2022-23.
Life Insurance Corp (LIC) has no current plans to bid in the ongoing $2.5 billion secondary share sale of Adani Enterprises, a source with direct knowledge of the matter told Reuters on Monday.
Adani’s group companies are under pressure after Hindenburg Research’s criticism of its business practices last week, that has since led to a $65 billion loss in the Indian group’s stock values. Adani has called the report baseless.
LIC, the country’s largest insurer, took 5% of Adani share offering’s anchor portion of $736 million, but has no plans to bid for more in the ongoing book building process that closes Tuesday, the source said.
Hit by weakened sentiment after the Hindenburg report, Adani Enterprises shares closed at 2,892.85 rupees ($35.51) on Monday, well below the offer price range of 3,112-3,276 rupees per share. The issue has so far been subscribed by 3%, raising doubts about its success.
“LIC will not go (bid) for institutional quota at present,” said the source, who did not want to be named as the decision making process is private.
LIC is taking a cautious approach and the board had only approved the anchor bid, the source said.
LIC already holds a 4.23% stake in the flagship Adani firm, while its other exposures include a 9.14% stake in Adani Ports and 5.96% in Adani Total Gas.
“Presently there is a situation that’s emerging and we are not sure what is the factual position … Since we are a large investor, we have the right to ask relevant questions and we will definitely engage with them,” LIC Managing Director Raj Kumar told Reuters.
