Gautam Adani News / Adani has made a 5-year 'master plan', this is how he will infuse life into the economy

Gautam Adani News: Asia's second richest businessman Gautam Adani has revealed his master plan for the next five years, under which he plans to spend more than Rs 1 lakh crore every year. In total, the Adani Group will invest Rs 5 lakh crore (about $57.16 billion) in the next five years. Under this ambitious plan, the group is preparing to raise more than $12.5 billion by selling equity.

How will funding be managed?

According to Jugeshinder Singh, Group CFO of Adani Group, the average capital expenditure (capex) for the next five years will be slightly more than Rs 1 lakh crore. Under this, the company will raise about $2.5 billion of equity every year, which will be done mainly through rights issue or qualified institutional placement (QIP).

Key focus areas of investment

Between 2019 and 2024, the Adani Group had raised $13.8 billion in equity, the largest fund raising by any Indian company after Reliance Industries. Now 85% of the investment to be made in the next five years will go to the following areas:

Green Energy and Power Transmission: Adani Group is already making big investments in renewable energy, and this will increase further in the coming years.

Power Generation and Distribution: The focus will be on expansion in the energy sector and development of state-of-the-art power grids.

Airport and Port Infrastructure: Investments will be made in the development of new airports and ports in the country and abroad.

Apart from this, the remaining 15% of the investment will be made in the metals, materials, copper and mining sectors.

Financial position and debt impact

As of September 30, 2024, the Adani Group had a cash reserve of Rs 53,024 crore, which is 20.5% of its total gross debt. The group plans to triple its EBITDA of net loans by 2028-29 and increase annual cash flow to Rs 1.7 lakh crore.

Increasing exposure of domestic banks

According to the group's recently announced $100 billion capex plan, as business projects are completed, net loans will decline to 1.3 times by 2028 and 1.3 times by 2031. During this period, the exposure of domestic banks will increase, while the risk of foreign lenders will decrease. Currently, 40% of the group's banking comes from global capital and 40% from the domestic market, while the remaining 20% ​​is transferred based on the project phase.

As of the end of September 2023, Adani Group had a total debt of Rs 2.58 lakh crore, of which domestic banks accounted for 42% and global banks 27%.

How will risk management be done?

The Adani Group claims to fully manage funding and investment strategies under this master plan. The company's infrastructure model gives monopoly-like returns after the completion of the assets, with low maintenance costs. While other infrastructure and manufacturing businesses have 30-40% expenses, in Adani's infrastructure business it is only 5-6%.

Conclusion

Gautam Adani's master plan for the next five years is going to bring big changes in India's infrastructure, energy, and logistics sector. This plan will not only strengthen the country's economic condition, but will also strengthen the Adani Group's hold at the global level. The group's strategy clearly points towards long-term growth and sustainable financial stability.