S&P to review ESG evaluation for Adani Transmission

Mumbai: Credit ratings agency S&P on Thursday said it will review the environmental, social and governance (ESG) practices of Adani Transmission (ATL). The decision by the ratings major is a fallout of the recent allegations of governance issues at the Adani Group that has impacted the stock and bond prices of all group companies, including that of ATL.
Gautam Adani, the group’s chairman, and his family together own 75% stake in ATL, which is India’s largest private power transmission and distribution company. “We will closely monitor developments, including any investigations by the Indian regulators and any additional disclosures by the Adani Group,” S&P Global said in a release.
The rating agency said allegations related to group governance and disclosures may affect the appetite of fund providers and business partners to support ATL’s growth. “This may raise financial and operational risks for the company.”
S&P said its 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.
One of the allegations by the US-based short-seller Hindenburg Research was about the role of Vinod Adani, the group chairman’s elder brother. Hindenburg alleged that Vinod Adani was managing several Mauritius-based entities, which in turn were investing in Adani Group’s stocks. The group, however, said Vinod Adani was a private entity and it had no control about how a private entity invested its money.
S&P said that it aims to complete its review of the ESG evaluation in the coming months. “We will assess the implications of the allegations on our ESG Evaluation,” the rating agency said.
In the fiscal year ended March 31, 2022, ATL operated 18,795 circuit kilometres of electric transmission lines. It had a total transformation capacity of 40,001 megavolt amperes. It also owns a 500-megawatt coal-fired power plant. On Thursday, ATL stock on the BSE closed at Rs 997, at 5% lower circuit.