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Last Updated : Sep 04, 2020 08:41 AM IST | Source: Moneycontrol.com

Ports, power, renewables and now airports — Adani Group’s big, bold infrastructure bets

Adani Group to become India’s largest private sector airport developer, port developer, power generator, and world’s largest green company. A look at how the conglomerate is cornering all prized infra assets in India

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For Gautam Adani, chairman of the $15 billion Adani Group, the past six years have been a heady ride. Beginning with the acquisition of Dhamra Port in Odisha in May 2014, when a new government was ushered in, there's been no looking back for the industrialist.

Since then, the group has bid aggressively for ports, power projects, airports, and other infrastructure assets, transforming itself into India’s largest infrastructure conglomerate in a relatively short space of time.

Under Adani's stewardship, the group has managed to bag some of the largest infrastructure projects that were up for grabs, including the latest one in June this year — the world's largest solar project of 8 gigawatts (GW), worth $6 billion (Rs 45,000 crore) — making the Adani Group the largest solar power operator worldwide.

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Last year, to everyone's surprise, the Adani Group — with little or no experience in airport development — bagged the rights to develop six airports in the country, outbidding established names like the GMR Group, Fairfax India, National Investment and Infrastructure Fund (NIIF), AMP Group and PNC Infratech.

Adani’s personal wealth, too, has grown as his infrastructure bets turned bigger over the years. His wealth has risen more than three-fold from $5.1 billion as on March 30, 2014, to $16.7 billion as on September 1, 2020. Much of this growth came about in the last one year — after the Bharatiya Janata Party (BJP) government was re-elected for a second term in May 2019. Adani’s personal wealth has doubled since then.

An aggressive and sustained acquisition strategy has seen the Adani Group picking up over a dozen assets in ports, power, transmission lines and the airport space worth over Rs 74,086 crore in the last six years. Here is a look at the group’s ambitious infrastructure bets.

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Ports:

Adani Ports and Special Economic Zone (APZEZ), owned by Adani Enterprises, is India’s largest commercial port operator, accounting for one-fourth of the cargo movement in the country. Its presence across 10 domestic ports in the six maritime states of Gujarat, Goa, Kerala, Andhra Pradesh, Tamil Nadu and Odisha presents the most widespread footprint with deepened hinterland connectivity. With the recent acquisition of Dighi Port in Maharashtra, APSEZ will have a presence in eight of India's nine coastal states, with the exception of West Bengal.

Last year, APZEZ became India’s first port operator to record a cargo movement of more than 200 million metric tonnes (MMT).

It took 12 years to reach 50 million metric tonnes (MMT) followed by another three years to cross 100 MMT in 2013-14 and then just five years to exceed 200 MMT in 2019-20. This year, APSEZ further consolidated its position in the port sector after acquiring a 75 percent stake in Krishnapatnam Port, the second largest private sector port in India, after Mundra, and handled 54 MMT of cargo in FY19. With this acquisition, APSEZ plans to accelerate its record cargo movements of over 400 MMT.

Energy:

With the acquisition of power projects of Lanco Infratech, GMR Group, Avantha Group and AES Corporation, Adani Power has emerged as India’s largest thermal power company with a capacity of close to 14,000 megawatts in the states of Gujarat, Maharashtra, Karnataka, Rajasthan, Odisha and Chhattisgarh. Almost half of the capacities of Adani Group come from acquisitions in the last six years. The company spent close to Rs 40,000 crore for acquiring the prized power assets.

In the power transmission sector, Adani started commissioning 3,800 circuit kilometres (ckt kms) transmission lines to evacuate power from its Mundra power plant in 2006, in addition to a further 1,200 ckt kms of transmission lines to evacuate power from its Tiroda plant in Maharashtra.

Adani Transmission (ATL) has since become the country's largest power transmission company, operating 11,000 ckt kms of transmission lines and around 18,000 MVA of power transmission capacity.

Most of the ATL capacity expansion was done through acquisitions as it bought GMR transmission assets in Rajasthan in 2016, Reliance Infrastructure transmission assets in Gujarat, Madhya Pradesh and Maharashtra in 2017 and KEC’s transmission assets in Rajasthan last year.

The company has further set up an ambitious target to set up 20,000 ckt kms of transmission lines by 2022 by leveraging both organic and inorganic opportunities.

Green Energy:

Until 2015, Adani was considered a coal baron as Adani Enterprises was India’s largest coal trader in the private sector with mining operations in India, Australia and Indonesia. However, with green energy becoming the new buzzword, this profile is also changing.

In 2015, India committed to building 175 GW renewable energy capacities by 2022 at the Paris Climate Cange Conference (COP-21). COP-21 also saw the launch of the International Solar Alliance. Helmed by India, the 121-country alliance aims to scale up solar energy to reduce dependence on fossil fuels.

Adani was quick to rework his business strategy in keeping with the government’s new energy policy. Adani Green Energy was incorporated to fuel Adani Group’s aspirations in the renewable energy space, and the group set itself a target of 10,000 MW of solar power capacity by 2022.

In June 2015, Adani Green signed a joint venture agreement with the government of Rajasthan to set up a 10,000 MW solar park, with anticipated investments of Rs 60,000 crore. In 2016, it unveiled the world’s largest solar power plant with a capacity of 648 MW in a single location in Tamil Nadu with investments of Rs 4,550 crore. Even as recently as 2017, the company had completed just two solar projects.

The company went public in 2018 and has accelerated its presence to reach the current milestone of being the largest solar player in the world in a short span of just five years, aiming to achieve an installed generation capacity of 25 GW of renewable power by 2025.

This year, Adani Green bagged the Solar Energy Corporation of India (SECI) award to build 8 gigawatts (GW) solar projects in the country, the largest in the world, entails an investment of Rs 45,000 crore ($6 billion). As part of the reward, Adani Solar will establish 2 GW of additional solar cell and module manufacturing capacity.

On September 1, Mercom Capital ranked the Adani Group as the world’s largest solar power generation asset owner in terms of operating, under construction and awarded solar projects. Adani’s renewable energy portfolio exceeds the total capacity installed by the entire US solar industry in 2019 and will displace over 1.4 billion tons of carbon dioxide over the life of its assets.

Airports:

The group is flying high in the airport development space as well. With the acquisition of Mumbai International Airport (MIAL), India’s second largest airport after Delhi in terms of traffic, Adani Airports is set to become India’s largest airports operator.

Adani Group through Adani Airports Holdings (AAHL) entered into an agreement with GVK Airport Developers, which will give AAHL a controlling stake in MIAL for Rs 15,000 crore. The deal will also give AAHL rights to develop the proposed Navi Mumbai International Airport (NMIAL), a project which has seen its cost escalating to Rs 16,000 crore.

It also won the mandate last year to manage and operate all six governments-owned Indian airports located in Ahmedabad, Lucknow, Mangalore, Jaipur, Trivandrum, and Guwahati, defeating GMR Group (operator of Delhi and Hyderabad airport), National Investment and Infrastructure Fund (NIIF), Fairfax India (operator of Bangalore airport) AMP Group and PNC Infratech. Adani Group has already signed concession agreements for Ahmedabad, Lucknow, Mangalore airports and has received cabinet approval for the other three.

“Mumbai, the City of Dreams! It is a privilege to have an opportunity to serve the air travellers of one of the greatest Metropolis on our planet. #GatewaytoGoodness – Look forward to helping transform the Indian Airport Sector!,” said Adani Group chairman Gautam Adani in a tweet on Monday morning after announcing the MIAL deal.

Incidentally, Adani started his career in Mumbai, then known as Bombay, as a diamond trader, before moving to Ahmedabad to set up Adani Exports Limited, now known as Adani Enterprises Limited (AEL), the flagship company of the Adani Group.

Adani is banking on passenger traffic in the country to grow 5-fold as India builds 200 additional airports to handle over 1 billion domestic and international passengers across tier 1, 2 and 3 cities, a majority of which will connect to Mumbai.

“Over this period, India’s top 30 cities are expected to each require two airports and Adani Airports sees itself well-positioned to help build the infrastructure platform required,” said Adani.

The MIAL acquisition will put the group in direct competition with the GM Rao-led GMR Group, India’s largest airport operator, which operates airports in Delhi, Hyderabad, Cebu, Goa, Bhogapuram, Bidar and Crete, handling over 101 million passengers globally.

Adani Group’s seven airports including Mumbai handled close to 75 million passengers in FY20 compared with over 85 million passengers handled by GMR Group’s Delhi and Hyderabad airports. “We have already become larger than GMR in terms of number of airports and soon we will overtake them in terms of passenger handling capacity also,” said an Adani official.

Adani would have further consolidated his position in the airport space had the group not lost the Jewar airport bid to Zurich International AG last year. Jewar will serve as a second airport to Delhi.

According to industry watchers and analysts, Zurich Airports bagging the bid for Jewar would help bring in competition among airports, which currently are a monopoly, and will also benefit the airlines.

The government is likely to invite bids for six more airports in the second phase of privatisation, which is expected to include the airports of Varanasi, Amritsar, Bhubaneswar, Trichi, Raipur and Indore.

Adani Enterprises and GMR Group will find themselves competing against international players for the upcoming bids to be the leader in the airports space.

“There was political pressure on some of the sellers that if they have to sell their assets, it has to go to one particular business group,” said an official of a leading business group, which sold its assets to Adani Group.

Piyush Pandey is a senior business journalist based in Mumbai. 
First Published on Sep 3, 2020 06:00 pm
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