In what could be one of the largest credit facilities extended by an Indian bank for an overseas project, the State Bank of India (SBI) will provide a loan of $ 1 billion (over Rs 6,000 crore) to Adani Mining, the Australian subsidiary of Adani Enterprises, for its mine project in Queensland.
The Adani group, headed by Gautam Adani, and the SBI have signed a memorandum of understanding which provides for a credit facility of up to $ 1 billion, subject to the detailed assessment of the company’s mine project at Carmichael, near Clermont in Western Queensland.
When contacted, a senior SBI official declined to share the details. Adani already has borrowings of close to
Rs 65,000 crore. The SBI’s loan offer comes at a time when banks are reporting sluggish loan demand and a rise in bad loans, with many companies, especially infrastructure firms, lining up for debt restructuring.
SBI shares shot up by 5.44 per cent to Rs 2,940.15 on the BSE on Monday after the loan announcement. Adani Enterprises gained 1.44 per cent to Rs 495.70.
“The MoU with SBI is a significant milestone in the development of our Carmichael mine. It is a unique asset that lies at the heart of our investment in Queensland and Australia, and aligns perfectly with our clear vision for delivering energy security in the Indian market,” said Gautam Adani, who is considered to be close to Prime Minister Narendra Modi.
The loan was announced while Adani was in Brisbane with a business delegation for the G20 summit, which Modi attended over the weekend. The Adani group’s proposed plan to build a $ 7 billion coal mine was cleared on Monday by Australia’s Queensland state, which also announced a major investment in rail infrastructure to support the Indian conglomerate’s mega project.
“SBI is a long-term and highly valued partner of Adani in its home market. It has long been a key financier of the company’s job-creating power, infrastructure and diversified projects in India and abroad,” Adani said in a statement.
According to the annual report of Adani Enterprises, the company had a long-term borrowing of Rs 49,584 crore at the end of March 31, 2014 and short-term borrowings of Rs 15,394 crore. It has posted a net profit of Rs 218 crore and a turnover of Rs 3328 crore for the quarter ended September 2014.
Adani Mining CEO and country head, Jeyakumar Janakaraj, added that the MoU and other agreements nearing their conclusion send a clear signal to the market that the company’s project is on track for first coal in 2017.