Adani Transmission Limited Annual Report FY 2019-20

Resilient Group Performance I am pleased to report that each one of our six publicly traded companies has performed well even as we started to confront the trying circumstances following the first few weeks of 2020. While we may have to do need-based course correction in our strategies in the wake of the challenge that we are facing, the roadmap remains clear. Our businesses are closely aligned to the lifeline of the economy, providing essential services to enhance the quality of life of citizens and addressing critical national infrastructure priorities. We look at our Group companies as individual growth drivers that complement each other’s strengths. Any shock to a system always helps drive home some key points and what the Indian businesses have learnt over the past few years, and most certainly post COVID-19, is the value of an optimal, and perhaps for some sectors, a conservative capital structure as well as the criticality to have systematic risk mitigation plans in place. Both optimal capital structures and risk mitigation are part of the maturing of the business philosophies as they grow in size and lay the foundation for stability as well as consistent value creation. At the Group level, our focus is on re-assessing our ‘risks’ and improving ‘rewards’ by optimising capital utilisation, and redesigning the organisational structure in our businesses. I am happy to share that during the year, the Group has been able to bring strategic global equity partners in Adani Gas, Adani Green Energy Ltd, and Adani Mumbai Electricity Ltd. The total investment by partners is $ 1.6 Billion and will help drive future growth of our businesses. It is also pertinent to mention that AEML (part of Adani Transmission) recently completed an investment grade, $ 1 Billion bond issuance, the first by a private integrated utility from India. The issue generated significant interest from international investors and was oversubscribed by 5.9 times. Similarly, ATL achieved distinctive feat of long-term $ 400 Million overseas bonds with the US Private Placements, the proceeds from which would be used to refinance recently commissioned assets, further reduce the cost of debt and progressively further deleverage the balance sheet. In the preceding 12 months, the Group has successfully placed seven bonds in the international markets, totaling to $ 4.26 Billion. Robust Business Model Over the last decade, India’s power demand has grown at an average annual rate of 4.5%, which is slower than its GDP growth rate. This dichotomy is explained by the preponderance of the service sector led growth and the fact that vast swathes of the population were not connected to power grids. On the other hand, energy and peak deficits, which were unsustainably high at 10% and 12.7%, respectively, in FY10, have come down to 0.5% and 0.7%, respectively, in FY20. The removal of this hurdle, which held back India’s economic growth and the well-being of its people for decades, was possible only with the contribution of the private sector aided by various supportive policies of the government and we have had the opportunity to have played a significant role as the largest private transmission land distribution company in the country. To address the increased demand as well as ensure operational excellence, we have focused on improving supply infrastructure and distribution cost efficiencies. Technology upgrades and expansion of the infrastructure – both to reduce the large amount of power currently lost during transmission and to improve access to electricity – has allowed us to position ourselves extremely well as compared to all our peers in this sector. Vertical Integration into Distribution Last year, we made the decision to foray into the power distribution business with our 100% owned subsidiary AEML. This proved to be a year of inflection for the Group. AEML took over Mumbai’s integrated Generation, Transmission and Distribution (GTD) utilities powering suburban Mumbai. This acquisition will be leveraged by the company to bid for more power distribution as it is likely to be opened up to public- private partnership, as a part of the government’s reform agenda. Our endeavour is to make the Mumbai retail electricity distribution a benchmark for any distribution business, both on the network management and customer service dimensions. Policy and Certainty of Performance We are also optimistic about the Indian government’s targeted policies towards achieving ‘24x7 Power for All’, which gives us the confidence to invest further in building capacities and exploring alternative means of power generation. Schemes such as the Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Saubhagya and Integrated Power Development Scheme (IPDS) are directed towards accelerating rural electrification and improving last-mile access. The introduction of tariff-based competitive bidding, delinking OUR ENDEAVOUR IS TO MAKE THE MUMBAI RETAIL ELECTRICITY DISTRIBUTION A BENCHMARK FOR ANY DISTRIBUTION BUSINESS, BOTH ON THE NETWORK MANAGEMENT AND CUSTOMER SERVICE DIMENSIONS. 16 Adani Transmission Limited