Analysis of Current Maturities of Long Term Borrowings- Is it a debt trap?

After our recent post on Charges registered in Ministry of Companies Affairs and news of “ Adani Shelves  $122 Million Bond sales” & “Adani Caling off FPO”, we further analysed why this FPO and Bond Sales are utmost necessary for the group and thereby we further analysed the Current Maturities of Long Term Borrowings of Adani’s listed entities along with Finance Charges, operating Cash Flows and Debt Comparison. The analysis of major entities is hereunder:

Meaning: Current maturity is defined as the portion of long-term debt that will come due within the next 12 months. A company’s long-term debt can include mortgages, bonds, car loans, and any other debt obligations that come due in more than a year.Rs 54,674 crore is required to be repaid within 31.03.2023


Borrowings Includes Long Term Borrowings, Short Term Borrowings. Lease liabilities and Other Borrowings.

Meaning:Operating cash flow (OCF) is a measure of the amount of cash generated by a company’s normal business operations. Operating cash flow indicates whether a company can generate sufficient positive cash flow to maintain and grow its operations, otherwise, it may require external financing for capital expansion.

Point to note:Against Incremental Cash flow from operating activity of Rs 4577 Crore since 31.03.2021 to 31.03.2022, the loan exposure of these 5 companies increased by Rs 61829 crore since 31.03.2021 to 31.03.2022.

What does that indicate:Against operating profit of Rs 30195 crore, Company is paying 14144 crore as Finance Cost which denotes 47% of profits. Imagine when cheap credit cycle its 47% then how much time will take to cross 60-70% in case of Expensive credit cycle or any rating degradation. Since S&P has put negative outlook on Adani Green and Adani Ports, the cost of debt will suddenly increase.

Source for Currenct maturities

1.Adani Transmission

Source:Adani Transmission Annual Report

2.Adani Enterprises

Source:Adani Enterprises Annual Report

3.Adani Green

Source: Adani Green Annual Report

4.Adani Power

5.Adani Ports

Source: Adani Power Annual Report

Another interesting thing which we found is CWIP after amendment in Companies Act 2013 with respect to disclosures of agewise.The analysis is as under:

1.Adani Transmission

Adani Enterprises

Adani Green

Adani Power

Adani Ports

Source:Annual Report of Adani Enterprises, Adani Transmission, Adani Ports, Adani Green and Adani Power.

This time we will leave to our readers and let them analyse how does CWIP plays role in Books of Accounts.

By CA Nishant Maheshwari and Vishal Vora

Disclaimer:The above blog is for educational purpose. We dont have any long or short position in any stocks of Adani Group.


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