Adani Group’s corporate governance woes mount, Fitch puts Adani stock on ‘Negative Watch’
Adani Group’s corporate governance practices have come under scrutiny after US authorities filed bribery charges against key officials of Adani Green Energy Limited (AGEL). Following the indictment, Fitch Ratings has placed Adani Energy Solutions Limited (AESL) and Adani Electricity Mumbai Limited (AEML) on “Rating Watch Negative,” indicating a possible downgrade of their ‘BBB-‘ ratings.
The US case is causing concern
The cases, which include allegations of bribery and misleading investors during the 2021 offshore note offering, have raised serious questions about governance across Adani. Two of the suspected board members are linked to the Adani founding family, raising concerns about the risk of contagion across the group.
Fitch cited “increased corporate governance risks” and potential liquidity challenges as key factors in the rating action. “A conviction or indication of weakness in management practices could significantly depress ratings,” Fitch said.
Liquidity is still there, but access to funds in the future is at risk
Fitch noted that AESL and AEML currently maintain strong liquidity. AESL’s recent placement of USD 1 billion in facilities ensures that it can finance capital expenditure in the near term, while AEML benefits from rules that allow the pass-through of operating and borrowing costs. However, Fitch warned of medium-term funding risks: “Increased reliance on offshore funding could increase refinancing risks and raise borrowing costs.”
The global implications are growing
The results of the lawsuit led to action by international stakeholders. Total Energies has halted investment in Adani’s projects, and ESG rating provider Morningstar Sustainlytics has announced plans to review Adani Green’s risks.
Adani dollar bonds, which initially fell sharply, firmed on Tuesday. Despite this, analysts remain cautious. “The issues underscore the importance of strong governance in any investment,” said Hortense Bioy, Morningstar’s head of sustainable investment.
What’s next for Adani?
The Fitch report highlights that the USDINR pair may face pressure if capital inflows are restricted and borrowing costs rise, especially as access to capital becomes a key concern for Adani-linked entities amid heightened governance risks.
The Adani Group denied the allegations, calling them “baseless,” and vowed to pursue legal remedies. However, as global scrutiny grows, the group’s reputation and financial future are at stake.
