Adani Transmission's ESG Ratings Under S&P Review

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Image of Adani Transmission Ltd.'s (ATL) industrial area in India.

Standard and Poor's (S&P), a global credit rating agency, has put Adani Transmission Ltd.'s (ATL) ESG evaluation on hold for review. The decision comes in response to recent accusations of substantial governance failures within the Adani group of companies.

In January 2023, the Hindenburg report, a short-selling report, raised serious concerns about the governance of the Adani Group, particularly in relation to shareholder disclosures and actions. Since then, the equity and bond prices of Adani group's entities, including ATL, have declined sharply.

In response to these allegations, Standard and Poor's (S&P), the global credit rating agency, has announced that it will closely monitor the situation, including any investigations by Indian regulators and any additional disclosures by the Adani group. S&P has stated that the allegations related to governance and disclosures may negatively impact fund providers and business partners' willingness to support ATL's growth, potentially increasing financial and operational risks for the company.

S&P's current evaluation of ATL's governance factors in the controlling shareholder's significant weight in decision-making, including in related-party transactions. The agency also highlighted that common parentage and name-sharing expose ATL to reputational risks from the broader Adani group.

S&P has placed ATL's ESG evaluation under review and aims to complete the evaluation in the upcoming months. The agency will assess the potential implications of the allegations based on the ESG evaluation.

ATL, India's largest private power transmission and distribution company, is controlled by the Adani family, which reportedly holds a 75% stake with the remaining shares in free float. In FY23, the company operated 18,795 circuit kilometres of electric transmission lines and had a total transformation capacity of 40,001 megavolt amperes. It also owns a 500-megawatt coal-fired power plant.

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Source: Business Standard