India’s Adani Group on Friday dismissed New Delhi Television‘s (NDTV) claims that market regulations prevent its founders from selling their shares in the company.
Responding to claims that founders Prannoy and Radhika Roy are unable to sell because they have been barred from activity in India’s security market since 2020, Adani called this “baseless” and “legally untenable”.
The giant conglomerate added that the founders’ investment entity was not part of any regulatory restrictions and was “bound to immediately perform its obligation and allot the equity shares” to the conglomerate.
Adani Group, led by Asia’s richest man Gautam Adani, is trying to take over NDTV, regarded by some as one of the few independent voices in India’s rapidly polarising media landscape.
The move has triggered concerns about NDTV’s editorial integrity, with the news channel saying the billionaire moved without its consent.
Adani is trying to execute the takeover through a little-known Indian company Vishvapradhan Commercial Private Ltd (VCPL).
It gave 4 billion rupees ($50 million) in loans to NDTV’s founders more than a decade ago in exchange for warrants that allowed it to buy a stake in the news group at any time.
The conglomerate said on Tuesday August 23 it had acquired VCPL and exercised those rights.
The NDTV takeover bid comes at a time when Adani Group has been described as “deeply overleveraged”.
Fitch Group’s debt research unit CreditSights said on Tuesday that Adani’s many investments in capital-intensive businesses could pose long-term risks to investors.
The conglomerate’s debt-funded growth plans could spiral “into a massive debt trap” and culminate in distress or default of its companies and the broader Indian economy in a “worst-case scenario”, CreditSights said.
The grim assessment of the conglomerate follows group companies investing in new sectors such as telecom, cement and long-term infrastructure projects.
The heavy debt of the companies pose a risk at a time when interest rates are high and due to the long gestation period of some of the infrastructure projects, CreditSights said in its report.
The research unit also flagged “high key-man risk”, saying the capability of senior management in Gautam Adani‘s absence may be inadequate.
Shares in Adani Group companies including flagship Adani Enterprises, Adani Green Energy, Adani Ports and Adani Power fell after the release of the report, which pegged the conglomerate’s total debt at 2.3 trillion rupees (nearly $29 billion).
Shares of Adani Green, up about 170% over the year, led the slide falling as much 6.9%. Adani Power, which has risen more than five-fold in the last year, fell 5% to hit the lower circuit- the limit a stock price can move on a single day.
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