Indian energy giant Adani raked in $643 million YoY – here’s how

August 2, 2024 Editor

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This week’s edition of Smart Energy’s Power Playbook places the lens on India’s Adani Energy Solutions Limited (AESL), which reported 47% year-on-year (YoY) increase in revenue, citing transmission and smart metering as simultaneous successes.

AESL – the transmission arm of conglomerate Adani – is the largest private transmission and distribution company in India and it shows.

The company reported operational revenue of ₹53.8 billion ($642.7 million), up by 46.8% from the previous year.

According to the company in a release, the key reason for this immense growth is the contribution from newly operationalised transmission assets, line addition at under-construction projects, an increase in units sold due to higher energy consumption in the distribution business at Mumbai and Mundra, as well as a contribution from the company’s growing smart metering business.

Commenting on the results in a release was Anil Sardana, MD of Adani Energy Solutions: “We remain focused on recognising and tapping market opportunities within the areas of interest and lead energy transition in India.

“We take pride in our contribution to developing critical transmission infrastructure, to facilitate renewable evacuation (…) and as well as strengthening the existing grid and driving energy efficiency in India through its smart metering programme.”

Now, let’s break this down by segment.

Power transmission

AESL’s key revenue has been driven by the success of its multiple transmission projects, through which they are aiming to build a large-scale green energy corridor.

In recent quarters, the company also completed the acquisition of Mahan Sipat transmission assets, adding 673ckm (circuit kilometres) to its operational network and adding multiple projects to its pipeline, expanding its order book to ₹170 billion ($2 billion) for transmission projects.

In a July rating rationale on the company from CRISIL Ratings, the Indian analytical company highlighted AESL’s transmission pipeline, citing a diverse portfolio of 26 operational transmission special purpose vehicles (SPVs) as of March 31, 2024.

These SPVs, states CRISIL, have a predictable revenue profile through transmission service agreements (TSAs) spread over 35 years.

Power distribution & smart metering

CRISIL adds that AESL’s business profile also gets supported through its established distribution business in Mumbai, housed under AEML (Adani Electricity Mumbai Limited).

Here, a cost-plus tariff regime ensures recovery of their operational and finance cost on regulated debt, along with a fixed return on regulated equity and a valid license until August 2036.

Additionally, the company is exploring multiple areas and has applied for a parallel distribution license in Navi Mumbai in Maharashtra, Greater Noida (Gautam Buddha Nagar) in Uttar Pradesh and the Mundra subdistrict in Gujarat.

Finally, states CRISIL, the company is also developing a smart meters arm, where revenue and cash flow is supported by long-term fixed price contracts with state distribution companies. Further to this, counterparty payment risk is mitigated by the presence of a direct debit facility (DDF).

In numbers, the company’s under-implementation pipelines currently stand at 22.8 million smart meters, including nine projects with a contract value of over ₹272 billion ($3.2 billion).

During an earnings conference call, AESL’s newly appointed chief financial officer Kunjal Mehta commented on the company’s results: “We continue to remain buoyant with respect to our transmission businesses.

“The emerging and important business, which is the smart metering business […] takes a total contract value of around ₹27,000 crores. In this line of business, we have already started the implementation of smart meters in the BEST regions and work is in full swing at other project locations in Maharashtra, Bihar, Assam, Uttarakhand and Andhra Pradesh.

“Most important is that Adani Electricity or Adani Energy Solutions is the only company currently in India, or the private player in India, which has an experience of running a distribution company and actually installing smart meters and making those smart meters work.

“There are very few players in the country who are doing the business of distribution and being able to deploy those smart meters at the same time.”

Cheers,
Yusuf Latief
Content Producer
Smart Energy International