The country’s largest private sector transmission company, Adani Transmission, a part of the $11 billion Adani Group, is finally entering the power distribution business with the acquisition of the Reliance Infrastructure’s (RInfra) integrated business—generation, transmission and distribution-- for Rs 12,000 crore. The company will take over its power generation units in Dahanu, power transmission networks across Mumbai and Maharashtra, and the power distribution network in Mumbai suburbs.
“We aspire to enter into electricity distribution business in key cities and districts in India in pursuit of government of India’s vision to enable 'Power for all by 2020,” says Gautam Adani, chairman, Adani Group. The company, he adds, is committed to leverage the experience to emerge as a leading utility in electricity distribution, thereby providing state-of-the-art, reliable and competitive supply experience to all our customers.
Adani simply means that there is a still scope for improvement in the existing electricity distribution network with new technological developments like using information technology, smart meters and the Internet of things, which will reshape the pattern of bulk supply electricity consumption, integrating renewable power into the smart grid, etc.
For Anil Sardana, managing director & CEO, Adani Transmission, the acquisition will allow the company to bid for more power distribution opportunities not just in India but in neighbouring countries, Africa and other locations as well. “Our endeavour", he adds "would be to make this as a benchmark distribution system, both on network management and customer services. The immense knowledge of the Mumbai team would also help us in multiplying our presence at other geographies”.
The acquisition will be housed in Adani Electricity Mumbai, a newly formed entity & a subsidiary of Adani Transmission Limited (ATL). It will serve over 3 million customers spread across 400 sq. km. in the city of Mumbai. Business operations at AEML post-acquisition will continue to function seamlessly with the absorption of about 5,000 existing employees across three business areas.
The financing will be done through a mix of equity and debt with Rs 3,400 coming from equity and the rest—Rs 8,500 crore—from debt. The logic of entering the electricity distribution makes eminent sense. With the government focussing on making “Power for all by 2020” a reality and many players both public and private making losses in the distribution space, it could present a huge opportunity for the Adani group to get into this business.
For the Anil Ambani- promoted Reliance Infrastructure, it is good tidings because it will enable the group to bring down its huge debt levels especially at a time when the Allahabad High Court has refused to extend the deadline for finalising the resolution plans for stressed power assets mandated by the Reserve Bank of India circular of February 12. It also means that a host of loss-making power companies will either be gobbled up by the more profitable companies or will be declared bankrupt. And the consolidation of the power sector is expected to begin soon.Adani Transmission had 8,600 km of transmission lines as on March 31, 2018 with a carrying capacity of 14,000 mega volt ampere and is present in eight cities. It has a market cap of nearly Rs 22,000 crore.