Covered for 12 months of payments: Adani Enterprises

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Published: May 7, 2020 2:01 AM

Adani Enterprises (AEL), the parent company for the group’s airports and renewable energy businesses, is covered for 12 months of payments amid the lockdown-related economic disruptions, the management said.

AEL’s consolidated net profit for the March quarter fell 78.4% year-on-year (y-o-y) to Rs 61.21 crore.AEL’s consolidated net profit for the March quarter fell 78.4% year-on-year (y-o-y) to Rs 61.21 crore.

Adani Enterprises (AEL), the parent company for the group’s airports and renewable energy businesses, is covered for 12 months of payments amid the lockdown-related economic disruptions, the management said on Wednesday. “From a business and financial point of view it becomes important for us to deal with the liquidity situation that an event like this brings up. We have risk management plans in place… we are fully covered from a liquidity perspective,” said AEL chief financial officer Jugeshinder Singh. The overall aggregate debt of the company is Rs 1.3 lakh crore, Singh added.

AEL’s consolidated net profit for the March quarter fell 78.4% year-on-year (y-o-y) to Rs 61.21 crore. The fall in net profit was capped by the Rs 895.84-crore other comprehensive income during the March quarter. Revenues from operations grew marginally by 1.5% y-o-y to Rs 13,428.83 crore during the quarter under review. Net profit for the full financial year 2019-20 grew 59% to Rs 1,138 crore.

The company has capex plans of around Rs 10,000 crore this fiscal. “We will start in September. The number for Adani Enterprise for this fiscal, our capex, would be about Rs 5,600 crore. And airports now, would be to the tune of around Rs 2,000 crore,” Singh said. Last year, the management had said that a maximum of its five-year capex plan would go towards new capex for its airports business. With the Covid-19 pandemic severely impacting the air travel, the management said its investment into its airports will get delayed by six months and is likely to commence in the third quarter of FY21.

“It has moved back by six months. Overall, our airports business plan is centered around non-aero focused businesses. That business plan does not alter because of the situation. What will alter is how all of us will look at the airports business. Now that people have faced an event risk, which is a massive risk for an airport-type infrastructure, naturally the planning and risk management alters a little bit. So we have to put that into our investment plans,” Singh said.

The company is still analysing the near-term impact of Covid-19 on its airports vertical and how it will modify the company’s investment plans. “Naturally, we have to think through (investment plans) if there is a structural change in travel patterns, which we have to evaluate. On the passenger side, especially on certain types of recreational travel on the international side, we will have to carefully evaluate what the impact would be. It does not change the investment plan, but changes the sequence in which we execute (it),” Singh said. Now, AEL’s focus over the next five years seems to have shifted to growing its renewables segment.

“60-65% of our capital at a portfolio level is going into solar and wind generation businesses. So, that business will probably be one of our biggest, if not the biggest, component.” The company aims to make Adani Green among the top 10 companies in the industry globally, Singh added.

AEL’s consolidated earnings before interest, tax, depreciation and amortisation (Ebitda) fell 31.4% y-o-y to Rs 647 crore during the March quarter. Consolidated expenses during the quarter were up 5.7% y-o-y to Rs 13,711.98 crore. Ebitda for the full year grew 17% to Rs 2,968 crore in FY20. AEL’s board on Wednesday approved raising up to Rs 2,500 crore through various instruments. On Wednesday, the company informed the stock exchanges that it will raise up to Rs 1,000 crore through debentures in one or more tranches on private placement.

The management said the funds raised “will enable us to do refinancing activity in line with our long-term plans.” The company has not delayed salaries, and has made some advance payments to contractors in some areas, management said. “We think this dislocation (Covid-19) will be good for infrastructure development in the long term,” Singh said.

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