Adani Electricity, Tata eye bigger pie in Mumbai power distribution

Battle for high-value customers heats up amid increased EV penetration

As Mumbai’s real estate and electric vehicle penetration grows, two of the city’s private power distribution companies, Adani Electricity and Tata Power, are eyeing a bigger business pie, particularly betting on high-value customers.

Adani Electricity Mumbai (AEML), the subsidiary which houses Adani Energy Solutions’ Mumbai distribution business, recorded a six per cent growth in total units sold in the financial year 2023-24 (FY24), the company’s presentation shows. This gain came at over 13 per cent growth in the year-ago period.  Rating agency Fitch attributed this growth to strong commercial and industrial demand.

Tata Power, the other private power distributor in Mumbai, in a response to Business Standard’s query last week said, “With the addition of new direct consumers, we have seen a growth of Rs 20 per cent in our direct customer’s segment.” The company added that with the number of direct customers increasing, electricity demand too has surged by over 40 per cent during the last three years.

Gautam Adani-promoted Adani Energy Solutions entered the Mumbai distribution business in 2018 through the purchase of assets from Anil Ambani-promoted Reliance Infrastructure. Tata Power has been an existing competitor since November 2009.

In the last five years, Adani Electricity Mumbai has grown its consumer base by 29 per cent, while Tata Power’s base, in the same period, grew by eight per cent. (See chart)

The city has also been rapidly growing post-pandemic in terms of new infrastructure and realty construction. The battle between the two companies for high-tension (HT) customers in the public services category is also heating up.

According to people in the know, one of the city’s main infrastructure projects – the Metro 2A line has explored a transfer of connection from Tata Power to Adani Electricity. Tata Power, in its response, however, said no connections related to the Metro-2A line and the Monorail have moved out from its network.

A Maharashtra Electricity Regulatory Commission (MERC) order in March this year highlighted a Tata Power submission which said, “a negative CAGR has been observed in HT VI(B) - Public Services category where a significant number of sales have switched over to other Distribution Licensee(s).”

However, in a response to Business Standard, Tata Power said, “In the last financial year, no Tata Power consumer migrated to any other distribution utility under HT Public services category due to competitive tariff and better Value-Added Services (VAS) like green power supply, and EV charging facilities.”

“Across all segments, Tata Power has acquired more customers in this category by providing the best open-access solutions, and VAS to its customers. It is worth mentioning that our consumers have enjoyed the benefit of competitive tariff, along with better quality of services,” the response said.

Since 2019, the city’s international airport has been among the public service category customers that have moved to Adani Electricity from Tata Power. Some bus depots of the city’s wide BEST bus network were already part of Adani’s Mumbai portfolio, which is now witnessing electric-vehicle charging growth in the same category.

Construction activity in the city has been on the rise – both for infrastructure and residential projects, which industry executives noted will add to both volumes and customers for distribution companies in the coming years. The expected growth makes analysts bullish on the distribution business for both entities.

“The company has a well-planned strategy to shift towards clean energy and targets a 2x rise in its profit after tax (PAT) (before minority) by FY27E over FY23. We believe growth would be largely driven by distribution and renewable energy business,” analysts at brokerage firm Sharekhan said in a February note on Tata Power.

“Adani’s assets are those privatised to Reliance Infra and had the lion’s share of the city’s business,” said an industry executive, adding, “Which also means the company will capitalise growth in similar proportion.” An email query sent to Adani Energy Solutions remained unanswered.

In a March 12 note on Adani Energy Solutions, analysts with brokerage firm Ventura noted, “The growth in the population, along with their enhanced use of white goods, mobile phones, and electronic devices, coupled with an increase in industrial production, has boosted both the number of household connections and power consumption in Mumbai. This trend of growth for AEML is expected to continue in the upcoming years,” the note added.

No. of consumers as of March, 2024 (in Lakhs) 

Tata Power (Mumbai Distribution)	Adani Electricity Mumbai
7.69	26.5*

% of each category in total volumes sold as of FY24
Residential	38	48
Commerical	20	39
Industrial	37	13

*Source: Company presentations, Company data
* Direct Supply customers