Power generation remains the only pain point for the mammoth Adani group

The conglomerate dominates practically every other sector it is engaged in, from shipping ports to coal trading, from edible oil to solar cells

In a single stroke during the last week of February, Gautam Adani-led Adani Enterprises started on the journey to become the largest airport operator in India when it bagged contracts to operate five airports in the country. The company will operate more airports than any other private player in India. In perspective, the Adani group will be the largest private airport operator in one of the world’s fastest growing aviation markets. It is already one of India’s largest coal traders, the largest private port operator, largest edible oil company, largest solar cell manufacturer and largest private player in piped gas distribution across Indian cities. In 2014, the Adani group consisted of 80 subsidiaries. Now it has 99 subsidiaries and associate companies. 

In 2013-2014, Adani Enterprises, the flagship of the group earned consolidated revenues of Rs 56,226 crore. This included all its business, including its much profitable ports enterprise. In 2017-18, the last full financial year for which figures are available, the group’s revenues (including its ports, power and transmission businesses which were spun off into separate entities in 2015) stood at Rs 74,332 crore – a growth of over 33 per cent over four years. According to BSE 200 index data analysis provided by AceEquity, the revenue of companies that comprise the BSE200 index grew 16 per cent during the same period.

While Adani Enterprises which drives most of its revenues from coal mining and trading is the group’s biggest revenue generator, the ports business is its most profitable venture.  

After being restructured in 2015-16, Adani Enterprises' total profits have declined from a little over Rs 1,000 crore to Rs 757 crore in 2017-18. The entire group’s profits have increased from a little above Rs 2,200 crore in 2013-14 to Rs 3,438 crore in 2017-18. This growth is bigger than the BSE200 index companies whose profits grew just about 13 per cent.

Since 2014, Adani Enterprises has more than doubled its domestic coal production. In 2017-18 it produced over eight million metric tonnes of coal. The cancellation of licences by the Supreme Court in 2014 seems to have had little impact on Adani Enterprises' operations. The Coal Mines (Special Provisions) Act, 2015 introduced by the government ensured that private players weren’t hurt badly. Adani Enterprises regained Mine Developer cum Operator (MDO) contracts for Parsa and Kente Extension blocks in Chhattisgarh. According to the company’s annual reports, it got MDO contracts for three more blocks in Chattisgarh (one at Gare Palma and two at Talabira) in 2017. Adani Enterprises also includes the group’s defence businesses which, among other things, opened an unmanned aerial vehicle (UAV) manufacturing facility in Hyderabad in December 2018.

The Adani group has also come to dominate India’s growing ports sector. In 2014, Adani operated three ports in Gujarat, including Mundra, which was India’s largest private port. By 2015-16, according to the company, it operated eight ports in five states and was developing two more. With the central government revising the model concession agreements for port development as part of its Sagarmala scheme, Adani Ports could get a shot in the arm in times to come. Under new rules, port developers can exit a project by selling their entire stake within two years of commercial operation. Adani Ports and Special Economic Zone Ltd recorded profits of Rs 3,683 crore in 2017-18 -– a rise of 59 per cent since 2014-15. With the central government approving another Rs 14,000 crore power sector SEZ by the group in Jharkhand to export all power generated there to Bangladesh, the coming few years could further add to Adani Power and SEZ’s financial muscle.

Adani’s power businesses haven’t been as successful as the other ventures. Adani Power Ltd ran losses since 2014 except in 2015-16. Its losses widened to more than Rs 6,000 crore in 2016-17. In 2017-18, its losses were more than Rs 2,000 crore. While Adani’s power generation businesses may be hit badly, its electricity transmission business is also turning into a money spinner. Adani Transmission’s net profits more than tripled to over Rs 1,100 crore in 2017-18 ever since it was spun off as a separate entity in 2015-16.