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Ladies and gentlemen, good day, and welcome to Adani Enterprises Limited Q4 FY '23 Earnings Conference Call hosted by Antique Stock Broking. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Rohit Natarajan from Antique Stock Broking. Thank you, and over to you, sir.
Thank you, Vikram. Good evening, everyone. On behalf of Antique Stock Broking, I welcome you all to the 4Q FY '23 earnings call for Adani Enterprises. We have with us from the management team, Mr. Vinay Prakash, Director, Adani Enterprises; and CEO of Natural Resources. We also have Mr. Robbie Singh, Group CFO; Mr. Saurabh Shah, Finance Controller; and Mr. Manan Vakharia from the Investor Relations. We will start with the brief opening remarks from the management, followed by the question-and-answer session. Thank you, and over to you.
Hi, my name is Robbie Singh , Group CFO and CFO for Adani Enterprise. I welcome you all to the earnings call to discuss FY '23 results and quarter 4 FY '23. AEL's current portfolio of business, both established and incubating are supplied across different verticals in energy utility, transport logistics, direct-to-consumer and primary industries. Within Primary Industries, which will be addressed by Vinay, we have established business in mining services and integrated resource mining with a developing sector in commercial mining. For the sustained long-term growth, we are making significant progress in our attractive incubation pipeline focused on Energy & Utilities, which is Adani new industries, green hydrogen ecosystem and full-service data center, AdaniConneX; and transport and logistics within which Adani Airport holding and Adani Road Transport. These businesses will further accelerate value creation for AEL shareholders. Our performance for quarter 4 and financial year '23 reflects a strong financial foundation and momentum. Consolidated total income for the year increased by 96% and to INR 138,175 crores. Consolidated EBITDA increased by 112% to INR 10,025 crores with strong performance from both established and incubating businesses. Consolidated profit after tax increased by over 200% to INR 2,473 crores. All 3 lines, top line and bottom line increased in triple-digit percentage terms. In EBITDA terms, the business has doubled in size in the last 12 months. Our financial results for the year need to be appreciated in the light of following. For the first time, EBITDA of incubating businesses at INR 5,043 crores, which is a growth of 375% is higher than the operating business EBITDA -- continuing business EBITDA, which itself grew at 36% to INR 4,982 crores. This signifies both operational excellence in relation to existing businesses, and coming of age of our incubating businesses. Secondly, the growth in EBITDA has been achieved while keeping debt at almost the same level as last year. Our focus on maintaining credit quality of AEL is demonstrated in these financial numbers. As a result, our net debt-to-EBITDA ratio has more than halved to 2.2x from 5.2x during the last year. Giving you a quick snapshot of operational aspects of incubating businesses. During the quarter, cell manufacturing line was made operational for 2 gigawatts. Also, we completed the upgradation of module line of 2 gigawatts with TOPCON Technology. In wind manufacturing, prototype 1 or 5.2-megawatt facility is completed in the last quarter, and we expect the certification to be achieved by June this year. Blade manufacturing facility, the ramp-up work and machine installation has started, and we expect to be completed in the next few quarters. From an operational point of view, module sales increased by 4% this quarter. In airports, our percentage traffic increased by 72% and air traffic movement by 56%. In the Adani Road Transport business, 3 of our HAM projects have completed and another 10 projects are well on their way to completion and are on schedule. Significantly in the ESG journey, our DJSI score, which was 51, it was arbitrarily adjusted by DJSI by 5 points to 46%, but it remains significantly above industry average of 21. Under the ANIL Ecosystem, we won the Aegis Graham Bell Award for category for innovation in manufacturing and Mumbai Airport has achieved the highest level 4-plus transition on carbon management. With this, I hand over to my colleague, Vinay, who will take you through Mining Services and IRM business highlights. Vinay, over to you.
Thanks, Robbie, and good morning to all. As far as the mining service business is concerned, Adani Enterprises Limited is the pioneer of MDO, Mine Development Operator concept in India with an integrated business model that spans across developing mines as well as the entire upstream/downstream activities. It provides the full service range right from seeking various approvals, land acquisition, INR, developing required infrastructure, mining, beneficiation and transportation to the designated consumption plant, which is thermal power stations.
[indiscernible] Mine, which is the first mine of MDO is located in the state of Chhattisgarh and has become the first mine to achieve the production milestone of 100 million metric tonne cumulated by this year and which we achieved the last quarter. During the quarter, the company has won 3 commercial mines, Turanga which is in Chhattisgarh; [indiscernible], which is in MP and Northwest of Maneri, which is in Maharashtra. With this company is now MDO for 8 core blocks, 2 iron ore blocks as well as we have now 10 commercial mines of to the combined peak-rated capacity of 150 million-plus metric tonne per annum. These projects are located in the state of Maharashtra, Chhattisgarh, Madhya Pradesh and Orissa and Jharkhand. The mining production in the quarter 4 FY '23 increased by 17% to 10 million metric tonne on a year-on-year basis, and the further dispatch increased to 7.9 million metric tonne. During the quarter, revenue from the mining increased by 18% to INR 803 crores and EBITDA increased by 8% to INR 311 crores. As far as the IRM business is concerned, integrated resource management business, we have continued to develop a business relationship with a diversified customer across various end user industries. We remain the #1 player in India and our endeavor to maintain the -- this position going forward remains intact. The volume in quarter 4 FY '23 increased by 20% to 20.5 million metric ton on a year-on-year basis. And the EBITDA for the year quarter 4 has increased by 42% to INR 859 crores on account of improved relation on year-on-year basis.
We are open to Q&A. Thank you.
[Operator Instructions] We take a first question from the line of Nikhil Abhyankar from ICICI Securities.
Sir, now that the things have settled down after the [indiscernible] have we finalized our CapEx plan for the next year? So if it is, then can you just give the quantum and where this CapEx will go. Can you just give a guidance on that.
See, overall, our CapEx is split into the relevant categories. So I'll go one by one. In relation to transportation, which is airport and road, the CapEx numbers for next year, are broadly about USD 2.1 billion. This is all at exchange rate of INR 80. Then data centers and new industry, which is utilities, there is about $800 million. Then we have in the materials area, where it approximately we expect the CapEx to be about $1 billion. So total CapEx about $3.8 billion for the year across our incubating businesses and our continuing businesses.
Understood. And sir, anything regarding green hydrogen plants and something around that?
So green hydrogen plants, as indicated, remain on foot. We expect the CapEx to start ramping up from about financial year '25, but really from about financial year '26 as we have indicated before. We basically, due to certain -- as you know, the market decision in relation to that made up a short seller report, we just wanted to focus on the committed CapEx for the 12-month period. But -- and that means that our ramp-ups will be slightly higher towards 2020 to 2030. But aside from that, in the core, infra and energy and utility space, plans continue afoot.
Understood, sir. And sir, our capacity for solar manufacturing is now 3.5 gigawatt. So should we expect the sales to almost double from here in the coming year? And what kind of margins do you expect on that?
So more than the margin, I think we are currently focused on the completion of the integrated program because our ultimate aim is to produce the cheapest hydrogen. In the interim period, yes, the Integrated Manufacturing division will also sell to third parties. There we expect normal about between 20% to 25% margin. But as I mentioned, a bigger aim of the integrated manufacturing facility is to control the input cost of green hydrogen, and that's where our focus remains is to complete the integrated facility.
Sir, but since there is one of the new CapEx till FY '25, you said regarding green emissions. So most likely 100% of this volume should be gone to the third party, right?
No, no, no. So I think the initial -- the models will go to third parties. But when we do the integrated development, there's not just the all -- for example, we have to -- we are in the process of an already planning for the testing of electrolyzer -- testing of electrolyzer for wind, testing of electrolyzer for solar, testing of electrolyzer for hybrid plants. So all of that work is going on, certification of the 5.2 megawatt wind turbines going on. So it's not just the sale and production. The whole -- actually the aim is towards green hydrogen production. In the meantime, yes, there are commercial orders and I think the next major objective for us is to complete the ingot wafer manufacturing facility -- and in the meantime, ongoing sales will continue. Sales on -- as I mentioned in my commentary, sales are already at -- for the quarter, we're at 375 megawatts. So sales are already ramping up. So we will hit the 2-gigawatt of sales also.
Okay, sir. Understood. Sir, just a final question on mining operations domestically and in Carmichael. So what is the target for production, domestically as well as in Carmichaels? And now specifically for Carmichaels, can you share the revenue and EBITDA for Carmichaels in Q4 FY '23.
Q4 FY '23 EBITDA for Carmichael, in terms of the rupee, EBITDA, INR 780 crores.
Okay. And the revenue, sir?
For the?
Revenue?
Revenue is INR 1,746 crores.
1,600 how much?
INR 1,746 crores.
Okay. And sir, any targets for the production in the coming year?
Vinay can answer that, but -- Vinay can answer that, but we will want to target for the 15 million tonne production. We are at a run rate of 1.1 million to 1.2 million tonne, Vinay, can you please specifically answer.
The target for the next year is 12 million tonne for -- as far as the Carmichael is concerned. As far as domestic mining is concerned, we are targeting to touch 40 million tonne for sure in next year. But then you have to keep in mind that there are certain other challenges also, which we have to face, and we have to achieve those numbers. So 40 and 12 is the number which we want to achieve.
I think just I'll add and embellish that. So 12 million tonnes is the commercial mining from Carmichael and 40 million tonne is MDO mining services and MDO servicing contracts.
We take our next question from the line of Apoorva Bahadur from Goldman Sachs.
Sir, 2 questions. Firstly, on the TOPCON module line side. I believe it's -- we have just commissioned the module line, the cell line, which we have commissioned is not TOPCON yet, right?
TOPCON.
The cell line is TOPCON as well, 2 gigawatts.
Yes, yes, yes.
Okay. Fair enough. And sir, secondly, I believe we have plans for integrated module manufacturing. We participated in the first phase of PLI, why did we not participate in the second phase given that I believe our plan was to extend it until 10 gigawatts?
No, I think for us, we -- it's not a question of participation. It's just the question of our business case. So we are comfortable with where we are in relation to the integrated facility that we want to have in the near term. So there's no specific -- if we want to participate, we want to complete and build, not just participate and keep the capacity. So we are -- at the moment, we are comfortable with where we need to be in relation to the hardware chain. And based on that plan, we are sufficient in relation to our current capacity planning for integrated solar lines, including ingot wafer cell module and also ancillaries plus the wind facility -- wind turbine facility.
So we will have around 4 gigawatts of integrated capacity.
As of now, yes.
We take the next question from the line of Nirav Shah from GeeCee Investments.
Congratulations on decent numbers and also the deleveraging that we saw in the second half. Sir, I have few questions. Firstly, I mean, if I'm looking at the segmental performance, I mean there's a marked improvement in the roads performance, which we have started reporting from this quarter onwards. So what is it pertaining to? I mean our EBIT has gone up from INR 122 crores to INR 1,430 crores.
I think Nirav, just I don't want to comment on the objective. But I think we've doubled the size of EBITDA for the company and my colleagues are feeling disheartened that you just call it decent, not spectacular. I guess Aside from that, they are all very upset that 100% growth in cash. So no. So I think the -- what you are witnessing both in airports and in roads is the power of the incubation model. So last 2 or 3 years was our CapEx intense period. Now what you are seeing is the return on those assets rapidly speeding up as the assets are coming online. And that is -- that will also continue because airport is still in early stage of ramp-up, very early stage of ramp-up and next year, we'll have our eighth operating airport, which in Mumbai will be up and running. And when the Mumbai will be up and running, we already have a backlog of 17 airlines wanting to come to Mumbai, new. So there is -- so what you are now seeing is the strength of the incubation model. And this incubation model will continue to bear fruit until those assets are big enough for us to consider the demerger plans like with Adani Green, ATDL, Adani Power, et cetera, over the last decade. So we expect that from an AEL perspective, you will continue to see the incubating businesses come into their own because from next year or in 18 months' time, you'll see the data center numbers come in. From next year, you'll also see Carmichael numbers come in on full basis. You will then also see by 2025, '26, you start seeing the green hydrogen ecosystem come on its own. So there's -- Adani Enterprise has a lot of runway and is poised very, very well as we have indicated. And it's unfortunate that we had to go through this criticized malicious report. But you see the numbers, the cash flow growth, the top line growth, the profitability growth, these are all triple-digit numbers. And also, which we always indicated into the market, as you commented on leverage, that the group has been on a deleveraging trend since 2015, '16. It's been going on for 8 years, and it is continuing. And I think these numbers plus our other -- our portfolio companies have reported like Adani Green, et cetera. They are also plus 50% growth and you've seen -- and you will continue to see this across the group. And we have -- we -- for us, the incubation story is just starting.
So just on the roads performance specific, I mean, there was no assets element all the business EBITDA that we've seen in the Roads segment.
Yes. Because the EBITDA is EBITDA -- that's why if you recall, we always say and sometimes we have this debate with analysts that why do we use run rate EBITDA. This is exactly what you are seeing. See, last year, EBITDA was artificially low because assets were just completing. So this year, you see the full year effect, all of sudden you see all the numbers. And this year also when you see the run rate number is a lot higher than this number because assets have completed, but EBITDA has only come for 1 month or 2 weeks or 3 weeks. So all of our businesses are that way because we are fast-growing businesses. And what you are seeing is the power of the asset development program, and now you are seeing that the EBITDA is catching up.
Okay. Sir, second question is on -- we mentioned that we have done an EBITDA of around INR 780 crores from Carmichael mines. If I look at the segmental performance, where does it get reflected, sir?
So it's part of the mining segment in case of the Australia mine as well as on the Indonesia mines.
Correct.
So it's IRM.
Part of the mining segment -- mining segment.
Okay. So I'm seeing only IRM, MDO and then the other segments. So.
So when you are seeing the presentation, MDO separately shown, in the UFR, if you will see that there is a mining segment under which the entire thing sits. I think Nirav has dropped off. Can we take the next question?
[Operator Instructions] We take the next question from the line of M.B. Mahesh from Kotak Securities.
Just 2 questions. How would you explain the sharp increase in finance cost in 4Q. It's gone up from INR 600 crores to INR 1,525 crores.
That is largely related to 2 elements. One is the right of use lease cost in relation to the rail in Australia; and second, the continuing CapEx program in the airport business.
Okay. And the second question, how do you look at the debt levels in this year? And what is the expected repayment scheduled?
No debt repayment scheduled is specifically outlined in our presentation on the various maturity structures. There is a separate credit presentation, which will also be released overall. But as I mentioned, our debt -- gross debt numbers -- our net debt number has not changed between this year and last year. And that is -- our net debt to EBITDA is 2.2x.
Absolutely. One clarification. There has been a significant reduction in short-term debt in airports and Australia project. If you could just kind of explain what's happened here.
No, that is basically from airport time, it has -- we did put in place for part of our airport SPV's longer-term capital plan and precisely the same thing happened for Australia as well.
[Operator Instructions] We take the next question from the line of Saloni Ajmera from Antique Limited.
So I just wanted to know about our new Industries Limited. So we have total investments of around USD 50 billion by FY 2030. So if you can give the capital allocation of supply chain product, green hydrogen generation and downstream products?
That, I will -- we will revert to you separately because although we have the numbers, overall, just to give you a broad idea. The -- about approximately 65% is for the generation element of green hydrogen power -- green power, downstream is about just about between 13% to 14%, same number for the actual electrolyzer for green hydrogen and the rest is within the manufacturing ecosystem.
Okay. So got it. And if you can throw some light on Mundra green hydrogen hub.
So that currently, we are focused on the integrated manufacturing system, certifications for the onshore wind turbines, preparatory work, pre-engineering work for the downstream systems, pre-engineering work for the generation plant, et cetera. So all of that work is going on in each element, the work is underway. On the specific, if you have detailed question, I think we'll take the question on note and we will -- we can send out a detailed note.
[Operator Instructions] We take the next question from the line of Rohit Natarajan from Antique Stock Broking.
So one thing that we have had is a tremendous growth in the -- you said in the opening remarks about the integrated resource management in terms of volumes for this year. But now that we have given -- seen that the coal prices have corrected, there is even saying that probably the volumes could also be corrected. What could be the guidance for FY '24 as such for the IRM part?
Vinay?
Yes. So as of the question. In fact, you're right, the prices have corrected, but we have been mentioning it for the last few years we are more into our service functions. We are now expanded into a complete country with set up at all the places. So possibility of our volumes going down drastically is not there. It all depends on how much import will be required. What we can assure you is that our market share will be higher only, higher to last year. Now numbers will depend as what type of imports will be seen by the country in the next financial years.
Okay. My second question is more to do with your mining portfolio. I saw that your presentation speaks about the peak-rated capacity of once 110 MMT once every mines are operational. And currently, our operational capacity says we are at 51 MMT and enterprises is doing, if I'm not missing something around 25 MMT. So what could possibly bridge this volume, I mean, which are the mines that could possibly be operational in the near term that can drive up the numbers in FY '24.
So all these mines which we are talking about comes out with a mine plan, which indicates that what is going to be our first year volume and what is going to be a ramp of volumes. So let us talk about one mine which is Talabira where we have the peak capacity as 23 million tonnes. And last year, we did only 10 million tonnes. Now the customer has given us the ramp-up plan according to their mind understanding, which says that by FY '26, we have to achieve 23 million tonnes. So we are equipped to do it. If a customer wants it to be 23 million tonnes before that, we can do it. So it depends on the customer and the mine plan to take it to a peak capacity as notified into -- in the mine plant. So currently, the mines which we are operating have the peak capacity of 50 million tonnes. So if everything goes well and the customer agrees, we can take 50 million tonnes from existing mine in by FY '25 FY '26.
Got it, sir. Got it. Sir, any color on the new mines that you have won, the commercial development, you haven't announced the capacity as such which I believe is under consideration. So what exactly will be the expected coal grade stripping ratio, EBITDA but for the commercial mines that you have won in the recent past?
So the commercial mine, which we are taking a mix of underground mine and open cast mine. They're also a mix of explored mine and unexplored mine. So I can give you a detail of mine by mine like [indiscernible], we have mine capacity declared as 5 million tonnes now. But there are at least 5 blocks, which are unexplored blocks where we have to do the exploration. We have to finalize the GR, and we have to agree mining peak capacity in those. So it will be a little early for me to give you a reasonable number, right number on the peak capacity as well as the contribution, which is going to be added in the kitty.
Okay. The mine services, if I'm not mistaken, were impacted due to the lower volumes in [indiscernible] Mine, is that issue sorted out?
Yes. So it was moving from Phase 1 to Phase 2, and we were expecting it to be very smooth, but we got an issue of 1.5 to 2 months' time. It is sorted out, we are already working in phase 2. And very hopeful that will continue like this, considering this mines requirement for Rajasthan government.
Sure. Now my question moves on to the roads part. We have given in the presentation that we have plans to have a portfolio of 12,000 kilometers by 2026 from a portfolio of 5,000 kilometers at this point in time. So logically, if we are targeting this portfolio, we should be winning at least 3,000 kilometers every year, which is a substantial chunk of the market share as such. So what is our roadmap for that?
Just 1 second. I think that's our stated projecting and I'm not really want to go by project by project and how that will come. But we've outlined a number based on our current best estimate in relation to where we stand on bidding and other opportunities in the country.
Okay. But would you give some color on maybe will it be hybrid annuity model, TOT, BOT, anything on that part?
Mainly BOT.
Okay. So given that you have a HAM portfolio right now, would you be monetizing it once the PCOD of COD is done? Is there any asset monetization -- scope of asset monetization over there?
No. See, if you see -- when you look at this, since you asked the question, I'm answering this for you in more a detail than it implied in your question. One is that we -- as I mentioned, our growth plan is in the BOT model. The reason is that we believe that we are best placed to address that risk in combination with execution and operations. So that's where we can deploy our capital in the most effective manner. Now initially, to set off, we undertook a certain number of HAM projects. Now HAM projects are not in natural -- from a risk return perspective, not a natural fit for a long-term infrastructure hold where we need to grow the businesses when we -- if we understand traffic risk, that's the best risk we can take because that's a direct consumer risk in India. So we are looking at it from that point. If you look at our like airports or look at Adani Transmission Growth in distribution, Adani Total Gas in distribution, that is all a direct synchronization with the aspirational rise of the Indian consumer. Similarly, we believe that BOT project offers the same opportunity -- consumer opportunity in the road sector. So if we -- so what -- rather than looking at -- if we look at some monetization of things like that, we will look at from a whole of business perspective rather than just specific assets, we are not really -- we don't -- we hardly ever do any specific asset monetization until and unless it's a specific thing like a partner brings a very specific expertise like containers, like terminals at port, et cetera. But otherwise, either we look at a platform basis or we'll continue our divestment of the BOT model.
We take next question from the line of Nirav Shah from GeeCee Investments.
Sir, I mean, how much CapEx have we spent on Navi Mumbai Airport billings and out of the total.
We will take that question specifically because it's a CWIP work in progress, whatever number I give you will be wrong in 2 weeks' time when the next billing goes out fortnightly. We can give you the schedule. It is expected to complete calendar year 2024 last quarter. and is on track for that. But we will take that question, and we will respond in writing.
We'll take the next question from the line of Prateek Kumar from Jefferies.
I have 3 questions. My first question is on airports. So there was a recent report on the airport that said center is likely to go on airport privatization plan. So what are you hearing on this in respect to new airport additions, which you were targeting earlier or post the recent set of airports.
No. I think -- I mean, we are ready. We have our network plan, we will target airports that we would like to get. So we have not heard anything other than the fact that aero privatization would continue. There can be timing movement here or there, but we haven't heard anything to the contrary in relation to the airport divestment by the government.
Okay. And a couple of questions on hydrogen. So with regard to Cabinet, you had that they approved some 2 lakhs [indiscernible] plans for green hydrogen projects for 5 companies. So is this incremental land we are looking at in another location from our base location or were we looking at the plan for the green hydrogen project.
This is incremental over and above our current holdings.
So this is another 80,000 hectares of land, which we are looking and it's a completely different locations. So is it also like sort of synergistically located like the one which we had.
Yes.
And lastly, there was this planned commissioning of test phase of 0.2 million tonne hydrogen in early part of FY '26. Is there a revised timeline for this?
We are just working through that. It will be plus 1 year.
It could be like FY '27, early FY '27 now for the test phase of 0.2 million.
Yes.
Ladies and gentlemen, due to time constraint, that was the last question. I'd now like to hand the conference back over to the management for closing comments. Over to you, sir.
Thank you to Antique team, and thank you to Vinay and Saurav, Manan, Rahul and team for this. And from our point of view, thank you for the questions. We are pleased to continue to showcase the business strength and business momentum, and you've seen that in effectively doubling our business in 1 year. So, thank you so much.
Thank you, sir. Ladies and gentlemen, on behalf of Antique Stock Broking, that concludes this conference. Thank you for joining with us, and you may now disconnect your lines.