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 and it is what we have to overcome with collective wisdom of scientists, doctors and society.
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 health infrastructure challenges that would have been far more painful. Yes, the economy and business has suffered immensely, lives and jobs have been impacted, and the migrant worker crisis saddened the entire nation, but the consequences of the unknown alternates could have been far grimmer. The direction that leaders of our nation, the doctors, the healthcare workers, the police, the army, the utility service provider, small street side vendors, and the citizens have taken to support each other is truly what defines India and its resilience. Added 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 proliferated to large section of mass population through the Jan Dhan, Aadhaar and Mobile linked payments have paid dividends. There could not have been a more apt time to reap the benefits of the infrastructure that the government has the vision to put in place.
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.
Robust business model:
Over the last decade, India’s power demand has grown at an average annual rate of 4.5%, which is slower than its GDP growth rate. This dichotomy is explained by the preponderance of the service sector led growth and the fact that vast swathes of the population were not connected to power grids. On the other hand, energy and peak deficits, which were unsustainably high at 10% and 12.7% respectively in FY 2009-10, have come down to 0.5% and 0.7% respectively in FY 2019-20. The removal of this hurdle, which held back India’s economic growth and the well-being of its people for decades, was possible only with the contribution of the private sector aided by various supportive policies of the Government and we have had the opportunity to have played a significant role as the largest private transmission land distribution company in the country.
To address the increased demand as well as ensure operational excellence, we have focused on improving supply infrastructure and distribution cost efficiencies. Technology upgrades and expansion of the infrastructure – both to reduce the large amount of power currently lost during transmission and to improve access to electricity has allowed us to position ourselves extremely well as compared to all our peers in this sector.
Vertical Integration into Distribution:
Last year, we made the decision to foray into the power distribution business with our 100% owned subsidiary AEML. This proved to be a year of inflection for the Group. AEML took over Mumbai’s integrated Generation, Transmission and Distribution utilities powering suburban Mumbai. This acquisition will be leveraged by the company to bid for more power distribution as it likely to be opened up to Public-Private partnership, as a part of the government’s reform agenda.
Our endeavour is to make the Mumbai retail electricity distribution as a benchmark for any distribution business, both on the network management and customer service dimensions.
Policy and Certainty of Performance:
We are also optimistic about the Indian government’s targeted policies towards achieving ‘24x7 power for all’ which gives us the confidence to invest further in building capacities and exploring alternative means of power generation. Schemes such as the Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), SAUBHAGYA and Integrated Power Development Scheme (IPDS) are directed towards accelerating rural electrification and improving last mile access. The introduction of tariff-based competitive bidding, delinking of transmission planning from generation planning, and an overall empowering policy landscape will continue to encourage scale and infuse efficiencies into the system and allow us to position ourselves extremely well for continued growth.
We also de-risked the distribution business, establishing our commitment to global standards of governance by bringing in the Qatar Investment Authority as a strategic partner. We received a Letter of Intent (LOI) for Transmission Project bid under TBCB in Maharashtra, from MSETCL for the Project 400 KV Kharghar Vikhroli Transmission Private Limited. This will be the first ever 400 KV substation facility in the city of Mumbai and a harbinger of our approach that will see us continue to explore growth opportunities by leveraging our strong transmission network.
Group’s Sustainability Journey:
Our journey towards sustainability accelerated over the past 12 months. We are now leading the clean energy transformation taking place not just in India but globally, and our Group is building one of the largest integrated energy portfolios. Our vision is to become the world’s largest solar power company by FY25, and the largest renewable power company by FY30. I must mention here that our Group and TOTAL signed definitive agreements to deepen our existing partnership and commitment for developing multi-energy offerings for the Indian energy market. We are fully committed to supporting our nation in diversifying its energy mix through partnerships in natural gas and solar energy.
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.