Adani Transmission, I think it's India's biggest private utility, it's facing a
major funding gap. And that, of course, could mean that it
has some of its expansion plans are thwarted and also that towards the
government efforts to expand energy infrastructure as well.
Tell us a little bit about this. Lest I forget to mention, the job of the
IPL match played out is also the home state to Gotham Madonna.
I think the great numbers Dodie as well. And this only is actually from South
India. So he won the IPL.
So that seems to be an interesting sort of outcome.
But the Adani Group, look, on the face of it, it seems like it's written now
that Hindenburg Storm, many of the group company stocks have recovered, but that
recovery is yet to be tested because let's not forget, the Adani Group is in
several very capital intensive businesses.
And we still need to see whether the stock price recovery and the general
recovery of that group from the Hindenburg onslaught is good enough and
strong enough to withstand further capital raising.
Now, that's the story that Bloomberg's ISE Believable talks about when he
speaks about Adani transmission needing a bunch of money over the course of the
next two years just to fulfil its existing project.
Something joins us now with more details.
What can you tell us about the number of on the amount of funds that the Adani
Transmission Company needs to be able to meet just the current requirements?
Good morning, Monica. So Adani transmission has grown rapidly
over the last seven years, from about 5000 kilometres west of transmission
lines to about 20 thousand kilometres. So they have about 13 underground
projects, transmission lines that are under construction or have been
completed, but are yet to of because of the pandemic cost overruns.
Delays in environmental clearances. A lot of these projects have stretched
timelines. Their budgets have been stretched, which
requires additional debt funding from the Fed and company and from banks as
well as additional equity. So last month in March, the India
Things, a unit of Fitch Ratings in India, had put out a note saying that
the equity requirement for data transmission.
To complete these transmission lines would go up to about 700 billion
dollars. The company is in the midst of raising
about a billion dollars. Its board is approved a plan to raise a
billion dollars over the course of the next coming months.
And ostensibly this will be used to fund these projects, complete these projects,
as well as a future cap ex that the Indian government plans to add about
twenty seven thousand kilometers to transmission lines over the next two
years. Undoubtedly that you would look to
acquire some of these transmission lines up with these concession agreements
through our auction processes that reflect this for the next two years.
So this billion dollars will go for the existing projects that need funding for
new projects that they've won the concession agreements for since the
start of the show, as well as future projects that make them as part of the
auctions at the Ministry of Power and other regulators.
What are the implications? What are the implications of this
proposed fundraising? So I think in the last six months we've
seen that new stocks take a beating. But in the last two months of the Covid,
however, that new transmission still seems to be fairly weak and so trading
around 67 percent the year to date. In a sense, if the companies are able to
raise these funds, it could signal that investors are willing to bet on that,
these large ambitions, on capital expenditure, on infrastructure.
And it would signal that a return for the company back towards
aggressive growth strategy is aggressive acquisition strategy.
It's been steep spear of steel position within the infrastructure
private infrastructure market within India.