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Accelerating shared prosperity and value creation
Greetings! We live in interesting times. India continues to be one of the world’s fastest growing economies.
We are expected to become the world’s fifth largest nation by the end of this year. Our country is expected to see an investment of a trillion dollars in infrastructure, split evenly between public and private sector resources and is on its way to become a five-trillion-dollar economy over the next five years.
India at an inflection point
In the recent elections, the mandate received by the Government is an indication that the citizens of our country have voted for stability in support of a vision that addresses large segments of the society in a fashion and scale that will radically change India’s development trajectory. In an analysis published earlier this year, the World Economic Forum predicted that India would have lifted 2.5 crore more households out of poverty over the next decade, thereby reducing the share to households below the poverty line to 5%. For a size of our country, these are staggering statistics and a harbinger of hope and optimism for the entire nation. Undoubtedly, there will be challenges and not all programmes may get executed to perfection but there cannot be any denying the fact that the ambitions of our nation are taking shape in a fashion that is transformative and exciting and India is at an inflection point.
The transformation of the Adani Group
For the Adani Group, FY19 has also been a year of inflection. Each one of our six publicly traded Group companies delivered record financial performance and made tangible progress in further consolidating their individual positions as industry leaders in every segment we operate in. In this context, it would be appropriate to mention the importance of the Central Electricity Regulatory Commission’s landmark decision to approve Adani Power’s Mundra power plant’s petition for higher Tariff. This was the largest challenge we had to overcome and is a reflection as much of the Group’s tenacity to pursue what it believes is justified as much a reflection of the fairness of the Indian court systems. Every one of the Group companies are now growth platforms that, while mutually independent, can draw upon the management and leadership synergies that exist within the Group.
APSEZ leading from the front
APSEZ had a record year on multiple fronts. It became the first Indian ports company to handle 200 MMT of cargo and made its foray into a distinguished league of the top five fastest growing port operators in the world. The most remarkable part of this narrative has been the acceleration witnessed over the last five years. It took APSEZ over a decade to go from 50 MMT to 100 MMT in FY14, and then just five years to yet again double the capacity. This is the best validation of APSEZ’s ability to execute on its strategic objectives and a reflection of the strong leadership team that APSEZ has built.
As promised, we have also made significant progress in continuing to build out the logistics infrastructure required to augment APSEZ’s growth strategy. According to the Strategy for New India@75 from Niti Aayog, by 2023, the Government has set an objective to reduce the logistics cost to less than 10% of GDP from the current level of 14%. Every 10% decline in indirect logistics cost has the potential to increase exports by 5-8% and APSEZ is well positioned to leverage this advantage. Our investments in multi-modal logistics park, inland waterways, coastal shipping, air cargo terminals and trucking services will cater to the fast-developing demands from the logistics sector. We are best placed to divert traffic with our inland network of spokes comprising warehouses and logistic parks connected through road, rail, and water. Our objective of becoming an end-to-end logistics player will further accelerate as India continues to become the trading hub for Asia, the Middle East, Africa, and Europe.
APSEZ has always strived to maximise shareholder value and has demonstrated sustained growth in value creation. To further this commitment, we have recently announced a buyback of shares at a price not exceeding Rs.500 a share, offering an 18% premium to the market price. APSEZ has already undertaken the majority of its large capex investments and most of these assets have now started yielding healthy margins. The share buyback, will further help us support our loyal shareholders that continue to believe in our vision.
Environment, social responsibility & governance
Along with our focus on the financial and operational performance, we are equally committed to continue to strengthen our corporate governance practices. In line with this, we have implemented a strict policy for related party transactions. To ensure transparency that all transactions are arms length we will include assessments by internal business teams, review through an external agency and a due diligence by an Executive Committee consisting of Board of Directors. These steps are in addition to the existing regulatory requirements.
Adani Foundation continues to go about its business of making a difference to the lives of the various communities the Group touches. Our foundation initiatives now reaches across 18 states and 2,250 villages and towns touching over 5,00,000 families. Along with the growth of the business, it is this goodness that makes our efforts meaningful.
Growth with Goodness
In closing, I thank all our stakeholders for their continued support and conviction in our philosophy of Growth with Goodness. We are committed to continue our exciting journey of growth with the support and guidance of our customers, employees, shareholders, bankers, governments and the Board. We shall continue to remain an active contributor to nation-building, adding value to our product portfolio and exploring new opportunities that contribute to the growth of our business and the nation.