A Time For Pragmatic Optimism
It is hard to believe that a 100-year-old Keynesian statement made ata time when telecommuting and global e-commerce were not even nebulous ideas could stillring so true.
'He could order by telephone sipping his morning tea in bed thevarious products of the whole earth in such quantity as he might see fit and reasonablyexpect their early delivery upon his doorstep. He could at the same moment and by the samemeans adventure his wealth in the natural resources and new enterprises of any quarter ofthe world.'
This appeared in John Maynard Keynes' influential best-seller TheEconomic Consequences of the Peace first published in 1919 when the word globalisationhad not even been coined (it first showed up in its modern meaning only in 1930). The factis that globalisation did exist even then except that the pace was sedentary incomparison to today's world.
Some Things Never Change
If Keynes' time is remembered for the gradual globalisation of socialand economic life our time will be remembered for the unbridled pace at whichglobalisation is enveloping our lives driven by the ubiquitous reach of the internet. Theconsequences are still emerging as our world's political cultural and economic barriersdissolve faster than ever before in a dual solvent of global interdependence and hyperinterconnectivity that are creating unprecedented new opportunities new business modelsand several new challenges.
Of all the challenges however one of the most significantconsequences of globalisation has been pandemics - and the most difficult of them has beenCOVID-19. While this is no surprise given that pandemics like the Asian Flu of 1957 spreadthrough trade and travel routes it is obvious that the world was just not prepared forthe explosive rate of spread of a pandemic of COVID- 19's scale. This has exposed severalof the fragilities of global interdependence that will need to be fixed and each countryis expected to do it differently.
Curiously though the remedy for this malady is coming through theprocess of globalisation as evidenced by the worldwide collaboration on acceleratedgenome sequencing vaccine development and vaccine manufacturing. Thereforeparadoxically both the problem and its solution lie in our embrace of globalisation.
Learnings During a Crisis
There is no denying the fact that while COVID-19 has challenged everynation India's size and population density have made it a harsher challenge. Indeed thepandemic froze economic priorities and forced the world to divert time and resources tomanage the crisis as did India.
No one denies that India could have done much better and that everylife lost is a tragedy. However as the world races to vaccinate its people we see Indiabeing criticised repeatedly for not doing enough to protect its own. Sometimes it isworth keeping in mind that India has more people than the combined population of EuropeNorth America and Oceania. In other words our country is facing a challenge bigger thanwhat three continents are facing at a time when every nation is maximising what it can dofor its own people and has far better healthcare infrastructure built over severaldecades. Given that our vaccination effort is bigger than the combined efforts of 87countries it is only fair to take a step back and determine the scale of the challengeour nation has confronted.
In this context I believe that the Atmanirbharta initiative launchedby the Government is a transformational and correct step in our nation's journey.
The COVID-19 pandemic has demonstrated to most nations across theworld that free market economies cannot be at the cost of self-reliance. We must believein our own capabilities and must be able to depend on it for economic constructionespecially in times of crisis. Therefore the five pillars of Atmanirbhar Bharat -Economy Infrastructure System Vibrant Demography and Demand - are a necessity toensure our economy builds the intrinsic robustness to manage disruptive black swan eventslike COVID-19. The definition of a free-market economy will undergo a change in apost-COVID-19 world and we must unhesitatingly write our own definition. After all notonly is India the world's largest democracy but it is also the world's most unique andboldest experiment with democracy. One size does not fit all and it is increasinglyevident that the phenomenon of hyper-globalisation that created the unrealisticexpectation of being the panacea for efficient manufacturing and services across the worldhas been one important cause of much of the inequalities we are witnessing today.Therefore only when we are able to fully mobilise the efforts of our own people will webe able to develop our economy in a way that we can take advantage of our country'sdemographic dividends that we have not yet been able to fully unleash. COVID-19 is awakeup call for all of us to transform ourselves. There cannot be a better time for us tocommence the journey towards true self-reliance (Atmanirbharta) for accelerating thebuilding of our nation in the post-COVID-19 world.
Organisational Values as a Platform for Numbers
The past year has been one that further reinforced my belief in thevalues of an organisation. About a decade back we chose Courage Trust and Commitment asthe guiding values that would determine our actions and today I credit the resiliencethat we have demonstrated to the stoutness of these values. It strengthens my confidencein our organisation's fortitude and this has been demonstrated in the results of ourGroup. Not only has the Adani Group emerged as India's benchmark for market leadership indifficult times but we have also broadcast our organisational ability to rapidly pivot inthe right market direction. An exciting example of this agility is our expandingpartnership with TOTAL (now TotalEnergies) who are strategically increasing theirrenewables portfolio.
These developments exemplify the resilience of our diversified businessacross sectors industries and geographies. Despite a pandemic-induced large-scaledisruption in economic activity all six of our listed entities posted resultssignificantly above market expectations and some of these record highlights appear below.
Capacity addition sweating of assets and a relentless focus onoperational excellence and efficiency ensured that the EBITDA of our listed portfolioregistered a year-on-year growth of 22% (H32337 Crore in FY 202021).
The return to equity shareholders (PAT) increased by asignificant 166% on a year-on-year basis (H9415 Crore in FY 2020-21).
All Adani portfolio stocks gave returns over 100% andoutperformed index by a significant margin (Nifty-50 gave a return of 71%).
Adani Green Energy Limited (AGEL) added 925 MW operationalcapacity achieved a high consistent Solar CUF of 22.5% and Wind CUF of 26.8%.
Adani Transmission Limited (ATL) added 3931 ckt km to itsnetwork reaching 18801 ckt km and sold a record 7169 Million units during the year.
Adani Ports and Special Economic Zone Limited (APSEZ) achieved acargo volume of 247 MMT (up by 11%) and reached a market share of 25% a gain of 4%points.
Adani Total Gas Limited (ATGL) added 102 CNG stations
500 commercial and 40939 domestic customers achieving a combinedvolume of 515 MMSCM (CNG+PNG)
APSEZ announced four acquisitions KPCL GPL Dighi Ports& SRCPL thus improving
East Coast - West Coast parity. It also announced the setting up of acontainer terminal at Colombo port in partnership with John Keells and SLPA.
Adani Enterprise Limited (AEL) took over operations of airportsat Ahmedabad Lucknow and Mangalore signed concession agreements for Guwahati Jaipur& Thiruvananthapuram and is in the process of acquiring Mumbai International AirportsLimited (MIAL) & Navi Mumbai International Airport Limited (NMIAL) airports.
AGEL fortified its partnership with TotalEnergies who acquired a50% stake in its 2.35 GW portfolio of operating solar assets and 20% equity stake in AGELfrom the founders for an investment amounting to USD 2.5 Billion.
While we can look back and feel satisfied about our results
I believe that the real phase of accelerated growth of the Adani Groupas an entity that benefits from having a portfolio of companies with several strategicadjacencies is only now gathering momentum. This helps us bridge the B2B to B2C gap inunique ways and will encompass our new businesses like Airports
Data Centres Defence and several others. What we have built over thepast two decades is India's largest integrated and yet diversified infrastructure businessthat is now manifesting itself as an integrated 'platform of platforms' and moving uscloser to unprecedented access to the Indian end consumer. I know of no business modelakin to ours with access to an unlimited B2B and B2C market over the next several decades.
Building the Template for Capitalising on Trends
While we are known as an organisation that makes swift decisions ourforay into the world of renewables and clean energy has further allowed us to templatiseour expansion process and has given us the confidence to move into several new sectors ashas been increasingly evident with our diverse business portfolio. As an example it isworth noting that the thought process of accelerating our clean energy footprint wasseeded as recently as in 2020 (at the Davos World Economic Forum in January 2020). From mymeetings at Davos two things had become evident.
First - Climate change had become the defining issue of our timeand climate change action must be accepted as a global national and personalresponsibility.
Second - With India driving one of the largest consumptiongrowths our country would have to play a defining role as it balanced its need to provideaffordable electricity to its citizens as well as accelerate its renewable energyambitions.
It was at Davos that I decided we must align with our nation'sperspective on renewable energy - and set ourselves the goal to be the world's largestsolar power producer. I also decided that a significant part of our Group's futureinvestments must be focused on sustainable and renewable energy. On the 22nd ofJanuary I penned down my thoughts and the Group's ambitions in a LinkedIn article whereinI wrote: "Our vision is to become the world's largest solar power company by 2025 andthereafter the world's largest renewable power company by 2030". I also stated thatwe would "build 25 Gigawatts by 2025 and also become the world's biggest solarplayer". Our existing portfolio of renewable power at that time stood at just 2.5Gigawatts.
We moved fast since January 2020 and my focus has been on building anorganisation that can add an unmatched 5 Gigawatts of generation capacity every year overthe next decade and foster a cleaner energy future. So far we are very much on target.Let me highlight some of the milestones:
Five months following the promise at Davos in Q2 of 2020 wewon the world's largest solar tender when SECI awarded us 8 Gigawatts through acompetitive bidding process.
Thereafter in Q3 of 2020 Mercom reported that we had becomethe world's largest solar power developer. We rose from No.6 position in 2019 to No.1 in2020 - in just nine months.
Simultaneously we formed game-changing partnerships in energyto start establishing the base for global partnerships. Inducting TotalEnergies as a 20%partner in the renewables business sealed a strategic alliance that covers investments inLNG terminals and renewable assets across India besides the gas utility business. Thepartnership within the renewables space in India will be a key contributor toTotalEnergies' objective of transforming into a clean energy leader.
Since January 2020 the value of our renewables businessincreased over 600 times thereby yielding one of the best returns across all stockmarkets.
Thereafter in May 2021 we acquired Softbank's and Bharti's
5 Gigawatts portfolio of renewable assets allowing us to leapfrog andget to our target of 25 Gigawatts a full four years ahead of our schedule.
This is what templatisation means to us and it gives us the confidenceto expand swiftly across several adjacent sectors. This success is also a manifestation ofthe core of our three organisational values - Courage Trust and Commitment
- that fundamentally define our Group.
Adani Foundation: Growth with Goodness
As a Group with businesses in locations where some of the poorestsegments of our population reside we are deeply conscious of our responsibility to helpmarginalised and underprivileged communities
- over and above just creating jobs. Through a wide variety ofinitiatives led by the Adani Foundation we have touched millions of lives acrossthousands of villages driving beneficial change in education health infrastructuredevelopment and sustainable livelihood development We expect to amplify our work anddouble these numbers over the next five years.
However in line with the rest of the world the Adani Foundation'sprimary focus over the past year was guided by the battle against COVID-19. One of theissues the cascading nature of this pandemic thrust into the national spotlight was thegrave inequality across our scattered communes in access to relief and care As soon asthe virus took hold we mapped out the urgencies of the moment and studied how best wecould mitigate distress across India We quickly realised that the battle needed more thanthe standard assortment of medical items like protective gear and diagnostic kits. Themost pressing need was for additional means to quickly deliver medical oxygen across theland.
The solution was tied to several items that were in short supplylocally. We needed more cryogenic tanks capable of transporting oxygen in supercooledliquid form more medical oxygen cylinders for hospitalised patients more oxygengenerator plants for healthcare facilities unable to rely on transported supplies and moreoxygen concentrators for people managing their infection by themselves.
It was a formidable challenge but one that we rose to quickly andefficiently. Working with our business partners and Indian missions across the world wemanaged to secure a massive life-saving inventory of these critical items the biggest ofwhich we brought in with the help of the Indian Air Force. Back home our indefatigablelogistics teams ensured that the oxygen tanks and cylinders were repeatedly refilled anddespatched to all corners of the country.
I am also proud that the Foundation went well beyond procuringessential supplies. In just days our engineering and medical teams expertly converted ourAdani Vidya Mandir school in Ahmedabad and the Noida Indoor Stadium into emergencyCOVID-19 Care Facilities with hundreds of beds oxygen support and catered food. In Bhujand Mundra our hospitals that serve as a general medical oasis for the neighbouringdistricts were swiftly turned into 100% COVID care hospitals.
At no time in the past was the work of the Adani Foundation morenecessary and relevant than it is now. I am deeply moved by the extent of the effort ourFoundation's team members have put in often choosing to ignore the risk to their ownhealth.
The Belief in the Long Term
Over the past few months there have been several voices that wonder ifIndia's target to be a five-trillion-dollar economy over the next four years isachievable. I personally see it as an inconsequential question. History has amplydemonstrated that out of every pandemic crisis emerge several learnings and I believethat India and the world become wiser as we go through this pandemic. India will be afive-trillion-dollar economy and will then go on to be a 15-trillion-
dollar-plus economy over the next two decades emerging as one of thelargest global markets in terms of consumption size and market capitalisation. There willbe bumps along the road as has been the case in the past and is expected to be the casein the future. However there cannot be any doubt that the largest middle-class that willever exist augmented by an increase in the working age and consuming population sharewill have a positive impact on India's growth rates very much in line with the demographicdividend India enjoys. The most essential factor required will be a better trainedworkforce and I have no reason to believe that over the next two decades we will not havebeen able to suitably address this challenge. It is a virtuous cycle that is driven by thegrowth in the middle-class population and India today has a longer runway than any othernation in the world.
Gautam S Adani