Adani says high debt nota concern, eyes new sectors We are evaluating opportunities in coal conversions, defence, water; existing ports, power, mining businesses remain sunrise sectors in a growing economy, says Adani BYMAULIK PATHAK. J mezanats (1) of solar power ma perio plants and at ast 10,000N1W of ‘olarparksby 2020, The groups AnEDABAD planning invest iliontn sla ae mmanufateringprojectin itch in ‘Ga, Deailen erg the orld Ingest degie oer solarplantin Tami Nad, "The peat lalopl coma af Wis copenton wi tnongani a Adan peut icone waters Pt pone edocs Up tet gu a. mnultiplecllengessuchastran "The Carmie dani EnterprisesLtd is aiming to start = ng project in Australia by end of 2020, after fac Inga four-year delay because of stilfresistance fromenvironmental groups, Tnan interview, group chairman Gautam Adani brushedasidecon cernsabout the group’sindebted ness and said it was looking at investment opportunities in sec torssuchas defence, coal conver ———_ mines in Gali: sionsand water. Hearlded thatthe — Gautam Adani Reuters lee, Australia, will produce about group continuestoexplore oppor 25 million tonnesof coala yearin tunities in the mining sectoras it | of Rs19,30 crore, AdaniPortsand | include coalconversions, defence | fiscal 2021, The group hasinvested Jooksatanintegrated “pit-to-plug” | Special Economie Zone Ltd | and water. However, Itstoo early | close to $4.5 billion in the first strategy encompassing mines,rall | Rs19,500 croreand Adani Enter- | tosay which ofthesewouldbethe | phase, Adanisaid. tisplanningto and the port sector prises Ltd RsI9,298 cro next sunrise sector for us.” tuse the coal tofuelits Mundraand Infralsacapitalintensivebusl- | Forthedebt, thegroup carries, | When asked about the group's | Udupi power plants, ness. Atgrouplevel.ourlong-term | the “corresponding value of net | plan inthe defence sector, which | Adanialsosaid he seesthe ports debt to Ebitda (earnings before | fixed asset is Rs1.25 trillion”, said | hasrecentlybeen openedup topri- | business—oneof the group’smost interest, taxes, depreciation and | Adani. vatefirms, Adanisaidthat itwasin | successful venturesso far—tomeet amortization) isat a comfortable | Thebillionairealsosaidthatina | “discussionstoenable the Makein | itstarget ofsetting up 200 million level of 3.25:1. Overall, for infra | growth economy,even the group's | Indiaprogramme but t’stooearly | tonnesofcango handling capacity business, weare robustly placed,” | existingbusinessesofports, power | to..comment.”He, however, clari- | by the end of 2018, two years said Adan, 5 and mining remain sunrise see- | fied that thegrouphad no plansto | before schedule. Atthe end of fiscal 2016, Adani | tors.“That being said, weare cer- | build ships forthe defence sector or the full PowerLtdhadaconsolidateddebt | tainlyevaluatingothersectorsthat | Adanihasset a target of10,000We aspire BY MAULIK PATHAK ‘mauikp@iivemint.com AHMEDABAD illionaire Gautam Adani chairman of, the Adani Group, talks about the company’s $16 bik Fion coal project in Australi an interview after winning a setiesof court battlesthat once threatened to derail the con troversial mining project. The Gujarat-based businessman plans for solar, the nest sunrise sectors for the group. compensatory tariff issues For its thermal power plants and the Adani Sagar Mala, a string of ports across the country. Edited excerpts: After much delay, your Jone of the ck with the rulings favoura beinginyou the Ausi nentextendingcf port toth do you se lian dre Also, you have lar ronmental groups in India too in the past. Whatdoyoufindincom- nonin the two? After four long years of approval processes and nnecessary struggles in courts, we have finally over comethehurdlesand we hope totake it to ourboard (Ada Enterprises) for final invest- ment dlecisionsby March, The michael mine,ailancl port project includes the develop: ment of a world-class mine with phase one production of million tonnes perannum (antpa) in FY2L. This includes 388-km standard gauge mult user railway line of 60 mtpa capacity and related port expansions. The coal fromthis minewould beused to fireour powerprojectsin Mundraand Udupi ‘Therecentsuocessful meet ing with Australian federal, stateand regional leaders not only enhancest ourconfidence butalso haspaved the way for enhancing trade multi-fold between the two nations, The much-needed intr structure for the project will ‘open up theGalilee Basinand put Australia ina competitive position ina global sea-borne market. The total life of mine capexisabout SI6 billion and wewould haveinvested about S45 billion in the first phase Now, coming to the other part, I will tell you that we remain fully committed and to be world leaders with our integrated pit-to-plug strategy: Adani ‘dani Group chairman Gautam Adani expects the company’s port business to clock 10-15% cargo growth in FYI7, very confident oftheenviron mental impact stu commissionandallthisinfor mation ispublic. Beit Indiaor Australiaorany other country the Impact studies we doare world-class and we use con sultants of global repute to augment our very trong inter nal team, There have been sever positive recent court out comes in Australia that rejected theclaimsof whatare largely activist-inspired appealsand uphold thestrong approvalsprocess by the gov ernment in Australiathat we have complied with. These activist-motivated appealsare at odds with the strong local community support in the regionstheprojeetsarebased. So, the court wins provide more confidence around the project time-framesfor Adant and meetinglemand in India as well as for the supporting communitiesin Australia Just likeany other company inoursector,therewillalways besome resistance for diffe cent reasons and it's part of our business to be able to adddressthese ina transparent and scientific manner There are both diferc and similaritieshetweenactiv istactivitiesinthetwo nations Increasingly theseare“polith cal” campaigns with wider objectives and often with fundingandsupport by global NGOs. Regrettably, these campaigns oten don't recog: nize that in many respects, Indiaand Adaniareat the fore jront of finding the right bal ance between ourleadership on renewable energy and the fact that ourdevelopingecon “omyalsoneedstheaffordable thermal energy that many ‘other nations still rely on for their base load. We continue to look for ‘opportunities in miningsector actosstheglobeasweaspireto be world leaders in the inte- grated pit-to-plug’ strategy in ‘oureneray vertical. includes mines, ail and port develop: ments, You seem to haye got a clear ambition to be a wer in the sectors that you venture Into, be it ports, power, mining or the more ed renewa- What isthe next sunrise sector foryo It Is Important to under stand that fora thy double-cl ‘That being aid, wearecer- tainlyevaluatingother sectors that includecoal conversions, defence and water. However i's too early to say which of these would be the next sun risesector forus, Solar seems (o have taken a top priority group in rec times. You up the wi Nadu. Solarindecd hastaken asi nificant priority and isa great example of how rapidly we capitalize on opportunities. Over the past I8 months, we have built a confirmed pipe line of 2,000MW of solar power, commissioned the world’s largest solar plant in Tamil Nadu ina record period of nine months. We have a growth econ mint target of con omylikeIndia, | NTERVIEW _wibuting even our core sectorsof ports, power (including solar) and Iiningremain sunrisescetors, given the sheer potential ahead. All youneed to do isto look at China and see what they have done over the past 25 years to be able to realize that the real period of growth for India within our core sec torsisstill ahead of us. A7»% GDP gross domesticproduct) growth rate and the strong policy advocaey that we are seeing from the government will providetheadditionaltail «wind for companteslike usto keep growing our businessat of capacity in the national target under Jawaharlal Nehru National Solar Mission (INNSM) of 100,000MW of id-connectesl solarpowerby 2022, Accordingly, we alm to Set up 10,000MW of solar power plants and at least 10,000MW of solar parksdur ing this period. One has to rememberthat ultimately, the speed of learning cyeles and the execution experience makesallthedifferenceandat this time, we are doing this perhaps faster than any other playerin the world. In Austra liatoo, we have focused plans toentertherenewableene panels ls prod ton facility. What kind of opportunity doyo in solar n foran Indian comp: We are in the process of commissioning a 1.2GW, India's kangest, integrated solar manulcturing ficlity, topo duce polysilicon, ingots, wafers, cellsand modulesand ancillary produetsunder Make in India initiative at Munda (Gujarat) in multiplephases. ‘One hastounderstand that under the INNSM_ pro: gramme, wearetalkingabout establishing a IOOGW solar jon capacity by 2022 No country in the world has ed their solar programmes at the pace this government hasset out todo, India is sot to become one of the leaders in the world i renewableenergy generation in the days to come. Indian solar power market Is expected to grow at CAGR of more than 60% fornestfiveto 10 years. With solar tariffs ‘coming in gra pauity with that of thermal power and going forward is expected to come down further, future energy demand will be met from the solarprojects. Currently, Indian solar manufacturing fs inefficient ‘compared to some global mar ketsddue to many reasonslike obsoleteand inflexibleunitsof existing manufacturers, lack of economy of scale, dependence Apri BHaTueKaR/MiNT KEE) TREW NE Rs ey ‘onimported raw material, ete Large scale, end to end, verti cally integrated solar manu facturing facility like that at Mundra will havea significant ‘edge over currently estab: lished celland module ma facturing, units in India and can easily compete with world's leading producers. Yes, there will be competition, but one has to recognize that wemust have the confidence that the only way we can bea majorplayer inthe solarareais to be able to compete across the solar value chain using ‘global benchmarksand there- fore we need to use our inte grated strategy asa differentia tor Moving fromsolar,tellus what is happening in juating coal pri- wwe been cern forthe ‘quitesome time now. From the very beginning, ourgoal has been to gene 20,000MW by 2020. Indian power sector has witnessed rapid advancement over the past few years with installed capacity surpassing 300GW andelectricity demand reach {ng 100 billion units. India's current percapitapowercon sumption is over L000kWh kilowatt hour) per capita per annum and aspires to reach 2,000kWh per capita per annum by 2024. With current power ation capacity of around 1,000MW, Adani Power is already the largest producer in iwaysensured fast-paced execution of pro- jects and implemented the Dest available technologies and practicesthat can serveas benchmarks for the power industry The company has already got relief from Appellate Tri bunal for Electricity, which held in its judgment that changesin Indonesian regula tionsaffecting discounted coal pricesundercontractisa force ‘majeureevent under the PPAs (power purchaseagreements) and asked the central regula tortograntappropriate relief The matter has been sub judicefrom last fouryearsand therefore, though coal price is falling, thecompany hasbeen undler severe financial stress duetodelayingrant ofappro- priate relief, Despite a long legal battle, wearehonouring our commitments to supply power. Similarly, grant of relief is also pending for the ‘ff of power supply from Kawai Qajasthan)and Tiroda (Maharashtra) power plants. fur- pansionsoracqui- sitions in the power sec- tor? Yes, weare looking to con: tinue our expansion and expect some of it willbe inor ganic. The Indian power sec toriswitnessing consolidation among the private sector developers, Wearelookingat all opportunities, brownfield and greenfield projects. A lot of the power projects up for acquisition come with multi ple challenges such as trans: mission evacuation, rail con nectivity,noPPA, nodomestic ccoalsupply and many more How have things changed In the power sector under the new Jeadershipatthe centre? The proof ofsuceess lies in metriesand Ithink the num bers speak for themselves. I have already spoken about how solar power has been catalysed by the policy initia tivestaken by thegovernment. Averagesolartariflsarenowat Rot per unit and thisisatre: ‘mendousachievement byany yardstick or measure and the long-term cascading benefits of this in helping indust gettingpowertoruralareasas well as galvanizing the solar valuechain in India willbe sig- nificant. wrthe group'smost suc cessful business, ports, has there been any nge In strategy for ining your previ- ¢ 200 mtpa by 2020? Also, you have built a huge network of ross the cout APSEZ (Adani Portsand SEZ. Ld) has developed and oper ates 10 ports/terminalsacross, the coastline of India. All our portsand terminalsare strate sical located, makinga string of ports or the Adani Sagar Mala. This network of mul ‘cargo portsenablesusto cater to major consumption and resource-rich regions of India. Theaddition ofthe Kattupalli port (in Tamil Nadu) earl thisyeartoaugment ourflank ingstrategy along with itssis- terEnnore portin Chennai hias been yetanother successwith volumesat the Kattupalliport already doubling since we have taken over operations. Kattupalli has a tremendous location and we plan to con vert ittoamulti-cargo port to further capitalize on this advantage. In Kerala, ourplan to build out the Vizhinjam transhipment port at the southern-most tip of India is on track and this will be yet another strategic por that will ddrav traffic from the world’s busiest shippingroutesaswell as allow our own country’s traffic to be transhipped within ourcountry wehandledacargo, volumeot weare expe growth in FYI7. Whileweare seeing growth in cargo han dlingat ouresistingports, we are also expanding our pres tence across the Indian coast line. Given the growth rates, wehaveseen in the portssec- torandthe progressmaceover thelastfew yearswewill reach our target of 200 mtpa well before 2020, most likely well ‘Currently, weare focus on timely completion of our LNG and LPG terminals at Mundraand Dhamra, coastal shipping, container trans shipmentand improvementin operational efficieney by lev tives together will help usin reachingour goal