Adani Enterprises defers capex plans by six months amid Covid-19 lockdown

Firm posts pre-tax loss of Rs 13.89 crore in Q4 of FY20, has laid out capex of Rs 10,000 cr for FY21

Amid the lockdown due to the Covid-19 pandemic, Adani Enterprises Ltd (AEL) on Wednesday said it has deferred its capital expenditure (capex) plans by six months for fiscal 2020-21. The company has laid out a capex of Rs 10,000 crore for FY 2020-21.

Similarly, the company's plans around its new airports business is also delayed by six months though the size of capex may not change, said AEL's chief financial officer Jugeshinder Singh in a post-earnings call. 

The flagship company of the Adani Group posted a consolidated loss before tax of Rs 13.89 crore for the fourth quarter ended March 30, 2020, according to its filing with the stock exchanges. The company had posted a consolidated profit before tax (PBT) of Rs 337.13 crore in the corresponding period last year. Its consolidated total income for Q4 of FY'20 grew marginally by 1.67 per cent to Rs 13,698.09 crore against Rs 13472.97 in Q4 of FY'19.

Commenting on liquidity, Singh said that the company was fully covered for the next 12 months across its six business verticals despite the short-term impact of Covid-19. Its plans for the new airports business were still on with AEL considering it to be "still a good business" despite the impact of lockdown on the airline and airport industry. The company has won bids for six airports at Ahmedabad, Mangalore, Lucknow, Trivandrum, Jaipur and Guwahati, out of which concession agreements have been signed for Ahmedabad, Mangalore and Lucknow. 

While there will be a short term impact on its solar business in terms of order and business development, the overall pipeline was the same for 2021. "We don't expect a long term or medium term shift in solar business," Singh said. While its capex plans may have slowed down, the company will be paying salaries on time. 

On the debt front, the company has seen the ratio against earnings before interest, tax, depreciation and amortization (EBITDA) shrink from eight times in 2013 to 4.2 times in 2020 due to deleveraging. "We are now one of the few infrastructure companies where four of our different business including transmission are rated at the level of the government of India," Singh said.

Providing a future outlook, Singh said that in next five years, Adani Group's solar and wind generation business under Adani Green would be of the similar size to Adani Transmission and Adani Ports. "About 60-65 per cent of our capital is going to solar and wind generation and it will be the first group company to be at the top five at a global level," Singh said, while adding that its logistics businesses including ports, airports and road network won't see any landscape change in next five years. 

On the other hand, AEL's mining business, which is currently 29 per cent of the group's EBITDA will go below 10 per cent in next five years even as its Australian arm is likely to churn out 11 million tonnes of coal by early 2021.

In Q4 of FY20, AEL's mining services business grew to 4.98 million metric tonnes (mmt) from 4.92 mmt in Q4 of FY19, integrated coal management (ICM) volume stood at 23.87 mmt as against 24.68 mmt in Q4 of FY19 and solar manufacturing volume stood at 193 Mw as against 260 Mw in Q4 of FY19.

Commenting on the results, Gautam Adani, Chairman, Adani Group said that with the Covid-19 pandemic bringing things to a halt, the group aimed to "emerge stronger" once situations normalize. "The emphasis will be on continued incubation of future businesses and create value for our stakeholders in the long term," Adani said.