Mumbai: In its largest finance-increasing exercised, Adani Group is set to increase $2.5 billion (Rs 15,000 crore) from investors in India & abroad. Within a quarter, the group will increase $1 billion (Rs 6,000 cr) by offering new stocks of Adani Enterprises, the group’s flagship firm, & an added $1.5 billion (Rs 9,000 crore) from banks abroad to finance various projects.
With a pro-business govt getting charge at the Centre, Adani Group companies have seen an unprecedented increase in their shares. Shares of Adani Enterprises have jumped 235 % since Narendra Modi was named the Bharatiya Janata Party’s prime ministerial candidate in September 2013.
Of its $1.5-billion foreign loan, the group has already increased $500 million (Rs 3,000 crore) to refinance the loans it had taken to obtain a coal & port project in Australian. The group is increasing finances for its $15.5-billion coal mining project in Australia, as well as its ports & power projects in India. Adani Group also needs funds for its Rs 5,500-crore takeover of Dhamra port from Larsen & Toubro & Tata Steel.
An email to Adani group did not elicit a response.
Insiders say the fund-raising will help Adani Enterprises & other group companies to increase operations. Experts say the Modi government’s 1st Budget is predicted to offer a major increase to the infrastructure sector, which will help companies in these sector bag new projects. The group delivered a good performance for the quarter finished March. Adani Enterprises reported a fivefold in improve in consolidated profit at Rs 2,848 crore, primarily driven by the company’s power business, which recorded added revenue since of compensatory tariff for two projects. Throughout the March quarter, contribution of the power business increased 200 % compared to the year-ago period; sales rose 40 % to Rs 16,171 cr.
Though, experts fear the group’s largest bet, in Australia, runs the risk of going sour. They say the project might not be viable & the price of electricity created by imported Australian coal will be very high for Indian consumers. Tim Beckley, director of energy fund studies at the Institute of Energy Economics, Sydney, said the Adani & GVK coal basin proposals were running 3-4 years delayed, with funding not in place. “To justify the construction of a power plant in India based on Australian coal, a power buy contract of Rs 5.4-5.7 per kWh will be needed, as well as cost indexation of 4 % a year. This is dual the last reported average sales cost of electricity across India of Rs 3 a kWh & triple the local coal-fired power buy cost signed while in recent years,” he said.
In an interview May 3, Adani Group Chairman Gautam Adani had said the group’s investments in Australia were aimed at augmenting India’s energy resources. “India has the 3rd-biggest reserves of coal in the world, but due to comprehensive & elaborate processes & slow decision-making, we have been lagging in coal mining. Investments by Indian companies, such as Adani, outside India in coal mining are to ensure India’s energy security,” he had said.
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