The Adani group -- Adani Enterprises in particular -- is investing considerably in energy and logistics in the country as Indian consumers pay a high cost for inefficiencies in transportation, said the group’s chief financial officer Jugeshinder Singh.
With respect to the public listing of its incubating businesses, Singh also said that it was sticking to its plan to demerge the airport business and list it by 2027-28.
The logistics cost in India was around 13 per cent of the GDP compared to 7 per cent in the US. “So, India is paying, consumers are paying, around $400 billion in extra logistics costs,” Singh said, adding, “that is why we are investing in logistics,” as well as energy and transportation.
The group has Adani Ports and Special Economic Zone, the largest privately owned ports operator in the country, while under Adani Enterprises it has roads and airports. In the energy sector, it has Adani Green Energy, Adani Energy Solutions, Adani Power and Adani Total Gas. The two segments form a significant chunk of its business portfolio, and this is where it is channelling its investments.
Singh was giving a broad context for the group and Adani Enterprises, the incubator of infrastructure assets, at the launch of the company’s maiden bond issue in India. It is raising up to ₹800 crore through the issue of non-convertible debentures which opens on September 4 and closes on September 17. The issuance has three tenors of 24 months, 36 months and 60 months with coupons of 9.25 per cent at the lower end of the tenor going up to 9.9 per cent at the upper end.
Most of the funds raised would be used to service debt.
Singh said the purpose of the issue was to dip its toes into the Indian debt markets so that domestic investors can also subscribe to the issue and participate in the growth of the company and the group. “This is our small start in public debt securities to allow individual shareholders to participate in debt securities, where the return on that security will exceed any fixed deposits returns.”
On the theme of energy security and reliance on local funding, Singh said that it was not appropriate to rely on global capital to build infrastructure and energy assets in India and should be owned by local stakeholders. The company and the group would be introducing innovative products in the Indian markets where domestic investors would invest, he said.
The NCD issue, rated ‘A+’ by CARE, is expected to find takers among corporates, high-networth individuals and retail investors. There is an allocation of 30 per cent for retail individual investors.
With respect to accessing global debt capital or domestic debt capital, Singh said that capital fundraising was dictated by the nature of the infrastructure which required funds with a long-term maturity. “We have to match the duration of the underlying business to the duration risk.”