Adani asks SBI for a loan of ₹14,000 cr

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Bombay : Adani Group has approached the country’s largest lender, State Bank of India (SBI), for a A 14,000 crore loan for the construction of a coal-to-polyvinyl chloride (PVC) processing plant in Mundra, Gujarat, two people with knowledge of the development said.

One of the biggest project credit proposals in recent months, the loan is even bigger than the 12,770 crore Adani Enterprises arm Navi Mumbai International Airport loan secured in March. The Gautam Adani-led conglomerate also recently raised 6,071 crore for a new copper refinery project in Mundra.

The outlines of the 15-year loan are being finalized, but the idea is that SBI will underwrite the entire loan and sell part of it to other lenders, as in the case of Navi Mumbai airport, where other lenders took over most of the loan. of the SBI. The individuals quoted above have stated that SBI will retain approximately 5,000 crore from the PVC project loan on its books. The total initial investment in the project is estimated at 19,000 crore, with a mixture of debt and equity.

“The bank is likely to peg the loan at its six-month marginal cost of funds-based lending rate (MCLR),” said one of the two people quoted above, adding that the spread on the MCLR six months – currently at 7.45% – remains to be determined and will depend on the external rating of the project.

The second person said other banks will also evaluate the loan proposal and would like to take on some of the exposure, depending on their appetite for business lending. That said, judging by lender interest in the Navi Mumbai airport project, SBI is likely to find plenty of takers for the 9,000 crore which he plans to sell. Mint had reported in April that SBI’s nod to loan 12,770 crore at Navi Mumbai International Airport has sparked a lot of interest among rival banks, with a group of five lenders willing to jointly take over the majority of the loan.

Emails sent to spokespersons for SBI and Adani Enterprises went unanswered.

The Adani Enterprises project, which will have a capacity of 2,000 KTPA (kilo tons per year), will manufacture PVC grades such as suspension PVC, chlorinated PVC and emulsion PVC, according to information from the Environmental Clearance Portal. of the government. The main raw materials for the project are salt, limestone, coal/coke and potassium chloride.

In its annual report for 2021-22, Adani Enterprises said it ventured into the petrochemical sector in 2021 and was exploring opportunities to develop a petrochemical cluster in Mundra. The first proposed 2 million metric tons (MMT) of coal-PVC capacity will likely be built in a phased manner. The company said the first phase will cover the development of 1,000 KTPA PVCs and is expected to go live by November 2024.

On June 29, Care Ratings reaffirmed the ratings assigned to Adani Enterprises’ bank facilities and debentures of 16,500 crores and 840 crores, respectively. The agency said it continues to take into consideration Adani Group’s enhanced financial flexibility, led by established track records of successful business incubation across all verticals.

Such large loans would allow lenders to expand their business portfolios again after years of lull as companies embarked on a process of deleveraging.

Over the past two quarters, bankers have spoken of a recovery in credit demand among corporate borrowers and believe significant growth is in sight.

Reserve Bank of India (RBI) data showed lending to industries (micro, small, medium and large) amounted to 31.6 trillion as of May 20, up 8.7% from the same period last year.

In its Financial Stability Report released last month, RBI said that while corporate sales and profitability have increased, a sustainable start to the investment cycle remains elusive.

Most of the recovery in credit demand, RBI said, occurred in the second half of last fiscal year, and the momentum has continued this year.

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