Adani keen on BG stake in Gujarat Gas

Adani group today said that it is interested in bidding for British Gas' stake in city gas distribution company—Gujarat Gas.
“Currently, due diligence process of BG's stake in Gujarat Gas is going on. We are interested in evaluation and and we are evaluating it. We shall share more details when the time is right,” said  Ameet Desai, managing director of Adani Enterprises.

British Gas has decided to exit from the business in which it has 65 per cent stake. Desai also said that if the acquisition comes through, it will have synergies with its own gas distribution business. The company will have to fight off many suitors who are known to have shown interest in the business like a consortium of public sector oil companies, Gaz de France, German power company E.ON, and a few private equity players.

Adani Ports and SEZ currently has the fourth largest port in the country in Mundra. In the next few years, the company expects it to become to the largest port in the country. The company has set plans for a national footprint by winning berths and terminal development work in various ports in Visakhapatnam and Kandla ports. It already has ports in Dahej and Marmagoa.

However, not all its port plans are running smooth. The company has been denied security clearance to bid for a number of port development projects in the last two years. Adani has not been allowed to participate in taking part in the bid process to win a number of projects. Some of them being a fertilizer loading berth and an iron ore loading facility at Visakhapatnam port, a container terminal project at Jawaharlal Nehru Port Trust, and Vizhinjam port in Kerala.

“Yes, we have these issues with the government. We are pursuing them both legally and also at the executive level. But to say that all our plans have been shot down is an exaggeration. We recently won the Kandla port project to develop a multi-purpose terminal,” said Desai.

Power is another area that the company is eyeing. With the synchronisation of yet another 660 megawatt unit at its power plant in Mundra, Adani Power has become the largest private sector power generation company, with a generating capacity of around 4,000 megawatts. It has also set a long-term plan to increase this capacity by five times to 20,000 megawatts by 2020.

This plan too has its own hurdles. One of them being fuel supply blocks which the entire sector is a victim to. Adani Power itself is facing issues with regards to its power purchase agreements signed with two states both Maharashtra and Gujarat.
With regards to Tiroda power project,Adani said that they signed a power purchase agreement based on Lohara mines which was cancelled by the environment ministry, as it is close to tiger reserves. “But we are not seeking to terminate the power purchase agreement with Maharashtra. We approached the government that since the mine is not available, that the terms should be re-adjusted,” said Adani.

“This is a larger issue which Adani Power is facing along with other power companies like go and no-go areas and non-availability of fuel supply,” said Adani. A change in law in Indonesia too is hurting the company after which, fuel imports have become expensive. It is setting-up 4,620 megawatts power capacity at Mundra based on imported coal from Indonesia. This issue too, Adani said is being addressed by the government. “The Prime Minister has asked the principal secretary to deal with this and it is being actively pursued by the government,” said Adani.

New brand

Energy will be one of the core focus areas of the company. The other two would be resources and logistics. Gautam Adani, the chairman today unveiled a new brand identity for the group, and its business strategy to focus on three areas—resources, logistics and energy.

The three colours of the new logo—green, blue and orange denote each of these verticals. A mixture of these three colours is purple, which is the colour of the group. These three verticals will be the core focus areas of the group now, and will pursue expansion within the three areas.

And in each of these areas, the company announced a development today. The company, which acquired Linc Energy in Australia has commenced its mining exploration programme in its Galilee Basin tenement. The group will invest $6 billion (Rs 29,400 crore) till 2015 in the mine and other infrastructure like Abbott Point Coal and railway infrastructure.   

Gautam Adani would be addressing the international employees via video conference from Ahmedabad on the growth plans of the company. The new logo, Adani says, will denote the business transformation that has taken place in the company.

“If you look at Adani group history, it started off as a trader. But in in 1998-99, it started infrastructure development of ports and in 2007, we entered into power generation and coal mining. So, it has become an integrated infrastructure play, we have gone global as well. So, we wanted to have a common theme,” said Adani. The current logo is a result of a re-branding exercise that they have undertaken six months back.

Along with the change in corporate identity, the group is also streamlining business areas. “We are expanding expeditiously in different areas in different parts of the world,” said Adani. As the company maintains its focus on core areas, they are also reduce emphasis on non-core areas—like real estate. However, the group will not give up the commitment, so even as a holding company will divest from the business, the Adani family will take over the business in an arms length transaction, vetted by independent agencies.