Adani Energy aims 16% rise in FY24 capex to ₹7,000 cr
3 min read 02 Aug 2023, 11:37 PM ISTThe company is planning to increase its capital expenditure outlay by about 10% every year, says its MD and chief executive Anil Sardana
PremiumAdani Energy Solutions Ltd (AESL) is targeting a capital expenditure of ₹7,000 crore in this financial year, a more than 16% rise from the previous year, said Anil Sardana, the company’s managing director and chief executive, in an interview.
The company is planning to increase its capital expenditure outlay by about 10% every year, he added. “We are sitting with a huge order book. Close to ₹20,000 crore of successful orders on the transmission side; ₹5,800 crore for smart metres, and ₹5,600 crore already sanctioned by a regulator from Mumbai. We will be targeting about ₹7,000 crore, plus-minus ₹500 crore, for this financial year. And, that will be growing by 10% every year." In FY23, AESL’s expenditure was at over ₹6,000 crore, he added.
The Adani Group company’s capital expenditure plan is relevant for two reasons: One, it comes in the wake of the Adani Group facing challenges with its valuation and finances after a report by a US-based short seller; and two, such investments will boost private sector investments in India, which has been lagging.
In January, a Hindenburg Research report had raised concerns over Adani Group’s financial reporting practices, leading to implications on the group’s stock valuations. Despite this, Sardana is optimistic about the company’s capital expenditure prospects, and emphasized the company’s goal of maintaining a healthy debt to Ebitda (earnings before interest, taxes, depreciation, and amortization) ratio to retain its investment-grade status.
AESL’s future plans also involve the rollout of smart meters, with applications submitted for three licences. The first licence aims to expand operations from Mundra to cover the Kutch-Saurashtra area. The second focuses on the Navi Mumbai area, that already has three million customers in Mumbai. And, the third licence covers western UP, spanning Ghaziabad, Jewar and Bulandshahr.
Earlier this week, the firm changed its name to Adani Energy Solutions Ltd from Adani Transmission.
“The retail distribution will be undergoing quite a lot of changes; we had, in any case, moved away from just transmission. Of course, our business there is fabulously healthy, but at the same time, why not add the retail side in a way that the title describes us? So, Adani Transmission was to that extent myopic in its manifestation of what we were doing. Therefore, we decided to go with Adani Energy Solutions, which perhaps will describe that, right from bulk electrons to retail electrons, we will be a solution provider for the entire energy sector," he added.
AESL has strategically expanded its operations into distribution, intending to provide a range of solutions to customers through a business-to-consumer (B2C) model, specifically catering to their green power needs.
Additionally the energy firm’s potential lies in its interest in the B2B telecom sector, Sardana said. “We have OPGW (optical fibre composite overhead ground wire) on top every line. We have contracts that connect different cities and geographies for the pairs that we offer on a long-term basis. We offer a lot to the antennas in our towers and there is huge demand for towers in Mumbai."
The power transmission company on Monday posted a net profit decline of 5.9% from ₹186 crore a year earlier to ₹175.1 crore in Q1. However, despite this, it achieved revenue growth of 17%, to ₹3,663.9 crore against ₹3,131.9 crore in Q1 FY23.
Even though the company’s financial costs remained their biggest non-operating profit eaters, Sardana emphasized that all of that is marked to the market or the price of options, all of these are non-cash entries. “If you look at the cash profit, you will find that we are pretty healthy. We generate close to about ₹ 7,750 crore cash, free cash flow after taking care of repayments and interest burden, which is what we will continue to work on," he added.
