Chairman, Adani Group
The Webster definition of resilience is “the capability of a strained body to recover its size and shape after deformation caused especially by compressive stress”. It's hard to believe that it was less than 3 months ago, on 11th March 2020 that the World Health Organization declared the outbreak of COVID-19 as a pandemic, meaning COVID-19 has spread worldwide. If there ever has been a time when the need for global resilience has been critical, it is now.
The Power to Overcome:
At times like this one looks for inspiration. In this context Wayne Muller, a well-known author, writes that for thousands of years humankind has suffered famine, war, plague, hunger, and countless injustices; it has experienced numberless births and deaths. Each community of people has had to find some way to speak about what sustained them or brought them grace—even in the midst of terrible sorrow. We have struggled to name this human trait, the universal force that makes the grass improbably push its way through concrete, the force that turns the earth, the energy that we seem to possess and blesses all life, the essential presence in our deepest nature that can never be spoken of with perfect accuracy but yet make us what we are. History is one big story of human overcoming. It’s what we are born to do.
What we must realize is that there are no absolute right or wrong ideas. What is required during an unprecedented, hard to model, crisis like Covid-19, is a Government that is willing to make decisions based on best available information at a given point of time and constantly adapting as new information becomes available. For this, the Indian Government and bureaucracy must be complimented. Countries with greater resources than ours have struggled and while our battle with the virus is far from over, I have no hesitation in stating that had the decisions that got made been delayed we could have been facing an unmitigated disaster that would not just impact India but have global ramifications. Yes, business has suffered immensely, lives and jobs have been lost, and the migrant worker crisis saddened the entire nation, but the consequences of the unknown alternates would be far grimmer. What the leaders of our nation, the doctors, the healthcare workers, the police, the army, the small street side vendors, and the citizens have done to support each other is truly what defines India and its resiliency. Add to this the fact that the Government is are now able to do direct benefits transfer as a result of the integrated approach it has built through the Jan Dhan, Aadhaar and Mobile linking systems and we start seeing the benefits of a Government that had the vision to put in place the infrastructure we need to be able to handle a crisis.
Sitting where we are today, I can say that history is in process of being scripted. I will be the first to admit that I have no way of predicting the short or mid-term possible economic outcomes as a result of Covid-19. However, there cannot be any denying the fact that India over the next several decades will be a market continuously on the up and one that simply cannot be ignored. It will be one of the world’s top consumption centers, manufacturing and service hubs and a beacon of stable democratic governance. If there was a time to make a bet on India, there may not be a better time than now. What I can predict is that on the other side of this crisis will emerge massive new opportunities, will emerge great new leaders, will emerge terrific businesses, and will emerge a few stronger nations. Those that succeed will be the ones that understand that resilience is built on the other side of the tunnel of crisis and we are already getting ready for this.
Resilient Group Performance
I am pleased to report that each one of our six publicly traded companies has performed well even as we started to confront the trying circumstances following the first few weeks of 2020. While we may have to do need-based course correction in our strategies in the wake of the challenge that we are facing, the roadmap remains clear. Our businesses are closely aligned to the lifeline of the economy, providing essential services to enhance the quality of life of citizens and addressing critical national infrastructure priorities. We look at our Group companies as individual growth drivers that complement each other’s strengths.
Any shock to a system always helps drive home some key points and what the Indian businesses have learnt over the past few years and most certainly post Covid 19 is the value of an optimal and perhaps for some sectors a conservative capital structure as well as the criticality to have systematic risk mitigation plans in place. Both optimal capital structures, and risk mitigation is a part of the maturing of the business philosophies as they grow in size and lays the foundation for stability as well as consistent value creation.
At the Group level, our focus is on optimising capital utilisation, redesigning the organisational structure to minimise risk in our businesses and funding operations in phases. I am happy to share that during the year, the Group has been able to bring strategic global equity partners in Adani Gas, Adani Green Energy Ltd and Adani Mumbai Electricity Ltd. The total investment is USD 1.6 bn; and will help drive future growth of our businesses. It is also pertinent to mention that AEML (part of Adani Transmission) recently completed an investment grade, USD 1 billion bond issuance, the first by a private integrated utility from India. The issue generated significant interest from international investors and was oversubscribed by 5.9 times. I must also mention here that APSEZ raised $750 million by selling overseas bonds, the proceeds from which would be used for fund expansion and further reduce the cost of debt and progressively further deleverage the balance sheet. In the preceding 12 months, the Group has successfully placed seven bonds in the international markets, totaling to 4.26 bn USD.
In 2015, at the Paris convention, India had initiated the Global Solar Alliance, which now constitutes 122 countries. Fast forward to today and it is now a foregone conclusion that renewable energy will play a critical role in India’s energy basket to ensure long-term energy security of the country. India is now home to the world’s largest utility-scale solar park and its wind power capacity has grown steadily over the past decade. Renewable energy infrastructure has provided India a much needed deflationary opportunity by leveraging the unlimited sustainable energy of the sun. I am also proud to state that over the past few years, our nation has shown the greatest intent by taking some of the most concrete actions for the world to look at it as one of the main beacons of hope for addressing climate change.
About 5 years back we were the fastest of the starting blocks having set up the largest solar power plant then in the world at Kamuthi in Tamilnadu. Our pursuit of continuing to grow our renewable portfolio has been second to none and we are probably driving one of the fastest ever de-carbonization programs given what we have built and have in the pipeline. At AGEL, we see a bouquet of long-term growth opportunities in the renewable sector and have initiated our efforts to support India’s vision to generate cleaner energy.
Power of a Strong Vision:
Our vision is to become the world’s largest solar power company by 2025 and largest renewable power company by 2030. Our existing portfolio of renewable power generating assets stands today at over 2.5 GW. This is expected to more than double by 2022, with the implementation of 3.5 GW under construction capacity. The operational capacity is further set to increase to 18 GW by 2025. To make this happen, we have committed to investing over 70% of our budgeted capex of the energy vertical into clean energy and energy-efficient systems. As a testimony of our commitment our renewable power generation capacity saw a 30% rise to 2,545 MW in FY20, while total electricity supplied jumped 12.7% to 4,373 million units (MU) during the period under review.
Another benchmark established during the year was the French oil major Total SA’s investment to acquire a 50% stake in AGEL’s operational solar business. Total SA will own 50% of the company that operates 2,148 MW solar projects owned by AGEL. The portfolio includes the 930 MW Restricted Group 1 & 570 MW Restricted Group 2 which recently raised US$ 862.5 million from the international bond markets. The JV Company will also own the operational 648MW Kamuthi Solar project. During the year we also refinanced our operating solar portfolio including the 648 MW Kamuthi Solar PV project from Power Finance Corporation.
A critical differentiator that is now being fully leveraged is the investment we have been making to ensure we adopt the best of global technologies to continue to innovate and ensure the digitization practices that will be core to our future competitiveness in this market. Our in-house technology team and robust experience in the solar and wind sectors is already yielding rich dividends and translating into some of the best efficiencies across the industry.
Growth with Goodness
We, at the Adani Parivar, are fighting the Covid-19 battle unitedly. Our Foundation has contributed Rs. 100 crore to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund). I am equally grateful to our workforce in India for contributing Rs. 4 crore for the battle against COVID-19. It is because of the solidarity demonstrated by this workforce of over 17,000 people that our Foundation could add another Rs. 4 crore, collectively contributing another Rs. 8 crore towards COVID-19 relief projects in India. As a responsible corporate, we will continue to stand by the nation in various capacities in this hour of need. On that note, I must also take this opportunity to thank our teams for the following measures:
- Adani Foundation contributed Rs. 5 crore to the Gujarat CM-Relief Fund and Rs. 1 crore to the Maharashtra CM Relief Fund; we have also contributed to Kattupalli District Collector COVID-19 Fund and the Bhadra District Administration.
- The Foundation is also contributing to the CM-Relief Funds of many other states such as Kerala, Jharkhand, Andhra Pradesh.
- Women cooperatives aided by Adani Saksham produced more than 1.2 lakh masks to help economically disadvantaged sections of the population.
- Gujarat Adani Institute of Medical Sciences (GAIMS) is the only hospital equipped for handling COVID-19 cases in Kutch, India's largest district.
In times such as this the spirit and compassion of our people reinstates my belief in our core philosophy of Growth with Goodness. Let all of us contribute to help our nation rise above this crisis. It may take time but there is ample optimism to show that it is possible.
Together, we will stay resilient and hopeful in these testing times.