By 2015, the Adani group went on “corporate restructuring” - demerger of its two subsidiaries, Adani Ports and Adani Power. This means ports and power will remain separate from “Adani Enterprise” as free-standing listed groups. By doing so, these two entities' market values remain unchanged (plus or minus), however, free float saw an exponential rise.
Adani ports rise from 25% to 43.8%.
Adani power rises from 25% to 41.9%
This surge in value was used for the expansion of ports and coal mines rapidly.
- Adani expands Dhamra port from its 14Mt to 100Mt pa capacity
- A 20Mtpa bulk terminal at Tuna Tekra, Kandla Port.
- US$0.2bn Container handling Terminal at Ennore Port in Tamil Nadu
- A Special Economic Zone Industrial Park at Mundra
- The coal-fired power plant at Jharkhand with a potential 2.5Mtpa capacity
- US$11bn, 10GW Rajasthan Solar Park JV
- US$4bn Gujarat Solar Manufacturing JV
- Acquires Lanco Infratech’s 1,200MW Udupi imported-coal fired power plant in 2015
- Acquires 600MW coal-fired Korba West power plant in Chhattisgarh from Avantha Group for US$0.7bn
- The 500kv 990km line from Mundra, Gujarat, to Mohindergarh, Haryana electricity transmission line
- The 400kv 434km line from Mundra, Gujarat, to Dehgam, Gujarat electricity transmission line
- The 400kv 434km line from Tiroda, Maharashtra, to Warora, Maharashtra electricity transmission line
Apart from this, Adani Enterprise has its trading (revenues of US$5.5bn,), agro products (revenues of US$1.7bn), gas distribution, coal mining, and energy transmission, divisions.
The Adani Group is financially and operationally leveraged to the expansion of a multitude of sectors across the Indian economy.
- Adani ports have more than 15% share in India‟s cargo in FY 2019-20
- Adani Ports & Special Economic Zone Limited‟s key products or revenue segments include income from port services, export incentives, infrastructure leasing income, and other operating revenue
- Adani Ports and Special Economic Zone Limited (APSEZ) represents a large network of ports with India‟s largest SEZ at Mundra, Gujarat.
- It’s India’s largest private port operator with a presence across ten locations in six maritime states Gujarat, Goa, Kerala, Andhra Pradesh, Tamil Nadu, and Odisha
- These ten ports altogether contain 45 berths and 14 terminals
- APSEZ Ports handles cargo such as crude, coal, containers to fertilizers, steel and project cargo, agricultural products automobiles, edible oil, chemical, etc.
Revenue generation model
Adani’s chief source of revenue mainly comes from its six key companies. Also, it owns a vast amount of cargo intake through its ports from which it gets money from shipping companies. They also get orders from the government that leads to profits.
The decline is due to the massive increase in equity shareholders' funds compared with the increase in net profit earned. This is because the company has transferred the maximum part of its earnings to the reserves of the business rather than providing dividends to its equity shareholders
The ROCE was fluctuating due to fluctuation in both the net profit earned and capital employed in the business and due to the lower distribution of dividends out of the reserves. Hence the Capital Employed funds have accumulated with reserves and fluctuate according to the Net Profit earned by the company
Answering the original question: How did Gautam Adani become the richest person in India?
- The uniqueness in Adani's business model includes a wide variety of businesses that bring profits from different sources as Adani invests in diversified businesses. It balances the profits and losses
- The company is creating value despite the fall in return on equity.
- The company will be profitable for the foreseeing future and in long run.
- The company has a good P/E ratio
- The primary consumers are the Middle-class section of society. They purchase food products such as edible oils and Soya chunks
- The rise in demand for renewable energy profits Adani
Credits :- Naveen Subramhanyam
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