adani transmission ltd share price Management discussions

Global economic overview

The global economy grew an estimated 6.1% in 2021 compared to a de-growth of 3.3% in 2020 and and is expected to grow at 2.9% in 2022.

The global economic recovery was attributed to accelerated vaccine rollout across 4.4 billion people, around 56% of the global population (single dose).

The global economy was affected by prohibitive shipping freight rates, a shortage of shipping containers and semiconductor chips in 2021. Inflation was at its highest since 2011, especially in the advanced economies, catalysed by a run up in commodity prices. Some emerging and developing economies were positioned to withdraw policy support to contain inflation even as the economic recovery was still incomplete.

The global economy is projected to grow at a modest 2.6% in 2022 following the Russia-Ukraine war. A higher interest rate environment could affect emerging markets and developing economies with large foreign currency borrowings and external financing needs in 2022.

Regional growth (%) 2021 2020
World output 6.1 (3.3)
Advanced economies 5.0 (4.9)
Emerging and developing economies 6.3 (2.4)

Performance of major economies

United States: The country reported GDP growth of 5.7% in 2021 compared to a de-growth of 3.4% in 2020, following the governments investment of trillions of dollars in COVID relief.

China: The countrys GDP grew 8.1% in 2021 compared to 2.3% in 2020 despite it being the novel coronavirus epicentre.

United Kingdom: The countrys GDP grew 7.5% in 2021 compared to a 9.9% de-growth in 2020.

Japan: The country reported growth of 1.7% in 2021 following a contraction in the previous year.

Germany: The country reported a GDP growth of 2.9% in 2021 compared to a decline of 4.9% in 2020.

(Source: World Bank, IMF, Business Standard, Times of India)

The Indian economy reported an attractive recovery in 2021-22, its GDP rebounding from a de-growth of 7.3% in 2020-21 to an estimated growth of 8.7% in 202122. By the close of 2021-22, India was among the six largest global economies, its economic growth rate was the fastest among major economies (save China), its market size at around 1.40 billion the second most populous in the world and its rural under-consumed population arguably the largest in the world.

Y-o-Y growth of the Indian economy

FY19 FY20 FY21 FY22
Real GDP growth (%) 6.1 4.2 (7.3) 8.7
Growth of the Indian economy, 2021-22
Q1, FY22 Q2, FY22 Q3, FY22 Q4, FY22
Real GDP growth (%) 20.1 8.4 5.4 4.1

confidence in Indias growth story, The government approved 100% FDI for insurance intermediaries and increased FDI limit in the insurance sector from 49% to 74% in the Union Budget 2021-22.

India surpassed the RS88,000 cr target set for asset monetisation in 2021-22, raising over RS97,000 crore with roads, power, coal, mining and minerals accounting for a large chunk of the transactions.

The Indian government launched a four-year RS6 lakh crore asset monetisation plan (roads and highways, pipelines, power transmission lines, telecom towers, railways station re-development, private trains, tracks, goods sheds, dedicated freight corridor, railways stadiums, airports, projects in major ports, coal mining pro jects, mineral mining blocks, national stad ia, redevelopment of colonies and hospitality assets).

In 2021, India was the largest recipient of global remittances. The country received USD 87 billion during 2021, with the US being the largest source (20%). Indias foreign exchange reserves stood at an all-time high of USD 642.45 billion as on September 3, 2021, crossing USD 600 billion in forex reserves for the first time.

Indias currency weakened 3.59% from RS73.28 to RS75.91 to a US dollar through FY 22. The consumer price index (CPI) of India stood at an estimated 5.3% in FY 2021-22. India reported improving Goods and Services Tax (GST) collections month-on-month in the second half of 2021-22 following the relaxation of the lockdown, validating the consumption-driven improvement in the economy. The country recorded its all-time highest GST collections in March 2022 at RS1.42 lakh crore, which was 15% higher than the corresponding period in 2021.

India ranked 62 in the 2020 World Banks Ease of Doing Business ranking. The country received positive FPIs worth RS51,000 crores in 2021 as the country ranked fifth among the worlds top leading stock markets with a market capitalisation of $3.21 trillion in March 2022.

The fiscal deficit was estimated at ~RS15.91 trillion for the year ending March 31, 2022 on account of a higher government expenditure during the year under review.

Indias per capita income was estimated to have increased 16.28% from RS1.29 lakh in 2020-21 to RS1.50 lakh in 2021-22 following a relaxation in lockdowns and increased vaccine rollout.

Indias tax collections increased to a record RS27.07 lakh crore in FY 2021-22 compared with a Budget estimate of RS22.17 lakh crore. While direct taxes increased 49%, indirect tax collections increased 30%. The tax-to- GDP ratio increased from 10.3% in FY21 to 11.7% in FY22, the highest since 1999.

Retail inflation in March at 6.95% was above the RBIs tolerance level of 6% but fuel prices played no part in this surge. Retail inflation spiked to a 17-month high in March 2022, above the upper limit of the RBIs tolerance band for the third straight month.

(Source: Economic Times, IMF, World Bank, EIU, Business Standard, McKinsey, SANDRP, Times of India, Livemint,, Indian Express, NDTV, Asian Development Bank)

Indian economic reforms and Budget 202223 provisions

The Budget 2022-23 seeks to lay the foundation of the Indian economy over the Amrit Kaal period of the next 25 years leading to 100 years of independence in 2047. The government is emphasizing the role of PM Gati Shakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, Climate Action, and Financing of Investments.

The capital expenditure target of the Indian government expanded by 35.4% from RS5.54 lakh crore to RS7.50 lakh crore. The effective capital expenditure for FY23 was seen at RS10.7 lakh crore. An outlay of RS5.25 lakh crore was made to the Ministry of Defence, 13.31% of the total Budget outlay. A boost was provided to Indias electric vehicle policy Scheme for Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle in India. An announcement of nearly RS20,000 crore was made for the PM Gati Shakti National Master Plan to catalyse the infrastructure sector. An expansion of 25,000 km was initiated in 2022-23 for the national highways network. To boost the agricultural sector, an allocation of RS2.37 lakh crore was made towards the procurement of wheat and paddy under MSP operations. An outlay of RS1.97 lakh crore was announced for Production Linked Incentive (PLI) schemes across 13 sectors.


The Indian economy is projected to grow by 8% in FY23 (World Bank estimate), buoyed by tailwinds of consistent agricultural performance, flattening of the COVID-19 infection curve, increase in government spending, favourable reforms and an efficient rollout of the vaccine programme, leading to a revival in economic activity.

Across the next three years, capital expenditure in core sectors - cement, metal, oil refining and power - should be about RS5 trillion. Besides, the governments production linked incentives (PLI)-led capex could generate an incremental RS1.4 trillion in sectors like consumer durables, pharmaceuticals and automobiles.

Global power sector overview

The increasing demand for global electricity in the first half of 2021 surpassed the growth of clean electricity, resulting in a rise in emissions-intensive coal power, This resulted in a spike in global power sector emissions beyond levels prior to the onset of the pandemic,

The second half of 2021 saw a further rise in global electricity demand.The year 2021 saw wind and solar driven growth of the clean energy sector. For the first time, these two sources produced more than 10% of global electricity generation, overtaking nuclear generation,

According to the energy think-tank Ember, the level of emissions from the power sector declined in the first half of 2020 due to the COVID-19 pandemic. However, RS1 2021 saw these levels surpassing pre-pandemic levels (RS1 2019) by 5%. Moreover, the demand for global electricity witnessed a rise of 5% in RS1 2021 in comparison to the pre-pandemic level, largely met by wind and solar (57%) and an increase in coal power (43%). Gas remained unchanged, while the hydro and nuclear power witnessed a minor decline. The demand for global electricity was estimated to increase 4.5% in 2021 compared to a contraction of 1% in 2020.

There was a growth trajectory in wind and solar energy. The number witnessed considerable growth, more than double from 5% of global electricity as recently as 2015. This was the first time that solar panels and wind turbines produced more than all the worlds nuclear power plants. The share of nuclear energy in global electricity experienced negligible change during this period as lesser number of new plants are being built outside China, and older nuclear plants are closed in OECD countries.(Source: Hindustan Times)

Indian power sector overview

Indias power sector is one of the most diversified in the world. The countrys power sector is one of the largest and most complex. The sources of its power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, as well as agricultural and domestic waste.

Over the past few decades, the country has seen a remarkable evolution. Today, almost every citizen has access to grid electricity, power deficiency has reduced and renewable energy capacity has reached a fourth of capacity. To meet the increasing demand for electricity in the country, a major addition to the installed generating capacity is mandated. In May 2018, the nation ranked fourth in the Asia-Pacific region out of 25 nations on an index that measured the countries overall power. India ranked fourth in wind, fifth in solar and fifth in renewable power installed capacity as of 2018. Moreover, the country ranked sixth in the list of countries to make significant investments in clean energy at US$ 90 billion. India was the only country among the G20 nations on track to achieve its targets under the Paris Agreement.

India stood as the third largest producer and second largest consumer of electricity in the world, with a total installed capacity of 395.6 GW as on 28th February, 2022. The country achieved success in its newer energy development initiatives, even as challenges persisted due to the third wave of Covid-19 and emergence of new variants. (Source: PIB)

Indias per capita power consumption

Countries India China USA France Japan
Per capita electricity consumption in kWh (2018) 1,208 5,297 12,235 8,097 7,446
Indias power generation
Year FY 201617 FY 201718 FY 201819 FY 201920 FY 202021 FY 202122
Power generation (in billion units) 1241.7 1308.1 1376.1 1389.1 1381.82 1,234.3*
*Up to January 2022 (Provisional), Source: CEA

India is expected to report an energy surplus of 6.4% and a peak surplus of 9.1% for FY2021-22 according to Central Electricity Authority. The north-eastern, southern, western and northern regions were expected to witness surplus energy generation of 24%, 7.6%, 7.9% and 7.5% respectively in FY2021-22. Power demand saw a decline during the second wave of Covid-19 in April and May 2021. The CEA expected about 11.47 GW power capacity addition during the year. During 2021-22 (upto January 2022), the share of renewable energy generation increased to 22.9% and share of non-fossil generation increased to 26.0%. The total generation (excluding Bhutan import) during 2021-22 (upto January 2022) was 1227.0 BU as against the actual generation of 1129.3 BU during the same period in the previous year. The country had 41123.5 MW under construction out of which 28460 MW was thermal and 12663.5 MW hydro. Indias renewable installed capacity was more than 152 GW - 78 GW was under installation and 25 GW under bidding.

For FY2021-22, the Ministry of Power approved the gross generation programme of 1,521 Billion Units. Thermal energy was expected to generate 1,155 BU or 76% of the overall generation. Renewable energy sources were expected to generate 165 BU or 11% of the total generation. Hydro and nuclear energy sources were expected to contribute 149.54 BU and 43.02 BU respectively in FY2021-22.

The Indian power sector is going through a major change that has redefined the outlook of the industry, Moreover, sustained economic growth continues to drive forward the demand for electricity in India. Over the succeeding years, many Indian households are expected to purchase appliances, air conditioning units and vehicles. India is all set to become the worlds most populous country by 2027. The country adds electricity equal to that of Los Angeles to its urban population each year. The Government of Indias focus on attaining Power for all has boosted capacity addition in the country. At the same time, the intensity of competition is growing at the market and supply sides (fuel, logistics, finances, and manpower), (Source: IBEF, Mercom India, Ministry of Power)


A roadmap to achieve 227 GW capacity in renewable energy (including 114 GW of solar power and 67 GW of wind power) by 2022, was released by the Government of India. Moreover, the Union Government of India is preparing a rent a roof policy to support its target of 40 gigawatts (GW) power generation via solar rooftop projects by the year 2022. The coal-based power-generation capacity in the country that currently stands at 202.41 GW is anticipated to witness a total installed capacity addition of 47.86 GW by 2022.

Indian power transmission sector overview

Indias transmission capacity has usually lagged its power generation capacity. There has been an increasing momentum to broaden Indias transmission network in accordance with increased electricity generation, growing electricity demand, development of fresh urban and semi-urban clusters coupled with the evolution of new electricity generation spots (mainly renewable energy).

Indias transmission line capacity was pegged at 4.52 lacs circuit kilometers and inter-regional power transfer capacity of 1,12,250 MW as on 31st December 2021. In FY2021-22, the country added 10,619 circuit kilometres and 54,298 MVA of fresh transformation capacity till 31st December 2021. A greater capacity will be mandated by the power transmission sector to transmit power from the renewable-rich regions to the rest of the nation. Grid digitalisation will enable the bidirectional flow of information and power. Besides, the utility-scale energy storage, being able to act as load or as supply, could play a significant role in improving system flexibility.

The countrys national transmission grid requires greater advancements to accelerate the adoption of renewable energy. This is necessary for India to accomplish its aspiring renewable energy target of 175 GW by 2022, increasing to 450GW by 2030. India possesses substantial renewable energy resources, which are irregularly spread. The demand from the States with scarce renewable energy was met by States with vast renewable energy capacities, validating the broadening of the national transmission network. Even with a sporadic presence of renewable energy in the country, balance was required from culminating power supply, electricity storage coupled with robust interstate grid connectivity. The intricacies of Indias grid demonstrate that transmission network deficiency could affect the adoption of renewable energy. Moreover, there was an increasing risk that renewable energy utilisation could be sub-optimal with lack of grid discipline and an advanced transmission network.

Growing competition in the transmission sector was expected to guide the country towards enhancing renewable energy generation without these assets becoming dispersed. The growing participation of new transmission players is catalyzing the reduction of construction costs, initiating updated technologies and encouraging the completion of projects within the stipulated time frame, This had increased the countrys accessibility of global debt and equity, On top of that, the increased valuation of certain transmission sector companies was an indication of the way a supportive regulatory foundation can increase capital investments for the transformation of Indias electricity system, The private sector is playing a pivotal role by infusing substantial capital at a low cost for creating transmission networks, capitalizing on record low global interest rates with reduced risk and extended infrastructure yields, It would also free up state governments finite resources, which could now be allocated for strengthening other social sectors like health or education,

Many States can aim to transform from being net electricity importing to net exporters of low cost, zero pollution, zero-emissions electricity through substantial transmission planning with vast renewable energy investments in planning, Besides, ambitious distributed hybrid projects for the ideal utilization of the transmission network is estimated to reduce the transmission tariff as the costs will be divided across an increasing stream of energy units (Sources: IEEFA, PV magazine, Ministry of Power)

Indias transmission line capacity addition

Year FY 201718 FY 201819 FY 201920 FY 202021 FY 202122
Cumulative capacity (in circuit kilometers) 3,90,970 4,13,407 4,25,071 4,41,821 4,52,440*

*Up to 31st December 2021 (Source: National Power Portal, Ministry of Power) Indias transformation capacity addition

Year FY 201718 FY 201819 FY 201920 FY 202021 FY 202122
Cumulative capacity (in MVA) 8,26,958 8,99,663 9,67,893 10,25,468 10,79,766*

*Up to 31st December 2021 (Source: National Power Portal, Ministry of Power)

Government initiatives

Revamped Distribution Sector Scheme (RDSS): On June 2021, the Cabinet Committee on Economic Affairs approved the Revamped Distribution Sector Scheme - a reforms-based and results-linked scheme with an allocation RS3,03,758 crore and a gross budgetary support of RS97,631 crore from Government of India over a period of five years from FY 2021-22 to FY 2025-26, The main objective of the scheme is to reduce the AT&C losses to pan-India levels of 12-15% and ACS-ARR gap to zero by 2024-25.

Ujjwal Discom Assurance Yojna (UDAY): UDAY is a scheme for the financial recovery of Power Distribution Companies (DISCOMs) started in November, 2015 with the aim to enhance the operational & financial effectiveness of the State Power Distribution Companies (DISCOMs), The electricity distribution companies of India (DISCOMs) are dragging in eradicating the gap between the average cost of supply and realised revenue (ACS-ARR gap), The Ujjwal Discom Assurance Yojana (UDAY) is expected to achieve a financial recovery for discoms.

24x7 - Power for All: This is a joint Initiative of the Government of India (GoI) and State Governments with the objective to provide 24x7 power to all households, industry, commercial businesses, public needs, any other electricity consuming entity and adequate power to agriculture farm holding,

DeenDayal Upadhyaya Gram Jyoti Yojana (DDUGJY):

It is designed to provide continuous power supply to the entire rural India (village electrification). It is one of the key initiatives of Government of India and a flagship programme of the Ministry of Power, The DDUGJY can benefit rural households significantly as electricity is vital for growth and development of the country.

Integrated Power Development Scheme (IPDS): On December, 2014, Ministry of Power, Government of India notified Integrated Power Development Scheme (IPDS) for reinforcing the power sub-transmission and distribution networks in urban areas, The primary aim of the scheme is reinforcing sub-transmission and distribution networks in the urban areas, metering distribution transformers / feeders / consumers, Enterprise Resource Planning (ERP), IT enablement of balance urban towns, Real Time-Data Acquisition System (RT-DAS) projects etc, Projects worth RS30,904 crore were sanctioned under IPDS and a grant of RS16,478 was released till November 2021 under IPDS, Distribution system - reinforcing projects in 524 circles were completed.

Saubhagya Scheme: Saubhagya scheme was initiated in 2017 with the aim to achieve universal household electrification for offering electricity connections to all un-electrified households in the rural areas and urban areas across the country. As on March 2021, all States registered 100% electrification of all the willing un-electrified households under this scheme. As on March, 2021, 2.817 crore households had been electrified since the launch of the scheme.

Budget allocation: The Union Budget for 2022-23 provided a Budgetary allocation of RS3,365 for the solar power sector, comprising grid interactive and off-grid projects, a 29% growth compared to the previous RS2,606 crore provided in the expenditure Budget document for 2022-23. The allocation for grid-interactive solar power projects at RS3,304 crore accounted for 63% of the total Budgetary allocation of RS5,206 crore for solar energy programmes. This consisted of an allocation in solar off-grid with RS61 crore, PM-KUSUM with RS1.715 crore, other renewable energy applications with RS0.1 crore and interest payment and issuing expenses on the bonds with a RS124 crore allocation. The total allocation for the wind energy projects in FY2022-23 stood at RS1,050 crore, contraction of 4.7% from RS1.102 crore for the previous financial year. (Source: Economic Times)

National Hydrogen Energy Mission: The Union Budget for 2021-22 announced a National Hydrogen Energy Mission (NHM) that is expected to create a road map for using hydrogen as an energy source. (Source: PIB)

Growth drivers

Growing population: India is expected to surpass China as the most populous country by 2027. Moreover, the countrys population is expected to increase and reach 1.52 billion by 2036, leading to an increased demand for power transmission in the country.

Urbanisation: The country is expected to witness a vast increase in its urban population on account of the anticipated rise in population. The countrys urban population is expected to reach 60 crore by 2030, accounting for 40y of the total population.

Renewable energy targets: The growing urgency in steering the global response to climate change is a significant idea for the country. When compared to worlds greenhouse gas emissions, Indias contribution seems to be negligible, but its contributions have become crucial with time. India is anticipated to increase its energy efficiency with the aim of achieving 450 GW of renewable energy capacity by 2030.

Green Energy Corridors: The Government initiated two schemes to develop highways for renewable power transmission, which is the Green Energy corridor I and the Green Energy Corridor II. Up-graded technologies or systems were executed in the Green Energy Corridor projects to enhance grid stability. Besides, the country utilized Static var compensator (SVCs) and STATic synchronous COMpensator (STATCOMs) to enhance power quality by ascertaining stabilised voltage levels and advancing in the power transfer capability of the transmission line.

Growing inter-regional demand-supply gap: The gap between demand and supply across regions are getting broader as load centres are located apart from conventional generation centres.

Ancient infrastructure: India, being the second largest market after China for transmission infrastructure, required installation of new transmission and distribution infrastructure to match ongoing trends in addition to the replacement of legacy infrastructure.

Growing private sector investments: The Indian power sector witnessed a paradigm shift due to growing private sector investments estimated at a little less than 50%. (Source: The wire, IEA, Economic Times, Livemint, India Today)

Financial overview

Operational revenues: During FY2021-22, operational revenue stood at RS10,184 crores as against RS8,840 crores in FY2020-21.

Interest and finance costs: Net interest and finance costs increased by 11% in FY2021-22.

Profit after tax: The Company reported a profit after tax of RS1,235.75 Crore in FY2021-22 compared to RS1,289.57 Crore in the preceding year.

Key ratios

Particulars 2021-22 2020-21
Debt-equity ratio 2.71 2.68
Return on equity/Net worth (%) 16.32 19.14
Book value per share (Rs) 72.29 65.40
Earnings per share (Rs) 8.9 9.02

FY 22 includes RS252 Crore past year arears related to MERC and CERC order. FY 21 includes one-time income of RS329.52 Crore recognised during the year based on the APTEL order related to April 2015 to March 2020

Company overview

The Adani Group entered the power transmission segment in 2006, much ahead of the official foundation of Adani Transmission Limited (ATL). The company was formed due to power evacuation requirements for Adanis Mundra thermal power plant. The lines developed for the evacuation of power extended to more than 3,800 ckt kms with connections from Mundra to Dehgam, Mundra to Mahendragarh and Tiroda to Warora.

Consequently, another line encompassing more than 1200 ckm was conceived in 2014 from Adanis Tiroda power plant. In 2015, identifying the vast capacity for headwind growth in the transmission sector, Adani Transmission Limited (ATL) demerged from Adani Enterprises Limited (AEL) to capitalize on wider opportunities in the national power transmission sector. ATL depended on numerous inorganic growth possibilities and acquired GMRs transmission assets in Rajasthan in 2016, Reliance Infrastructures transmission assets in Gujarat, Madhya Pradesh and Maharashtra in 2017 and KECs Bikaner-Sikar transmission asset in Rajasthan in 2019.

ATL entered the power distribution segment following the acquisition of Reliance Infrastructures power generation, transmission and distribution business in 2018. Adani Electricity Mumbai Limited enjoys a distribution network of over 400 square kms, offering services to over 3 million customers in Mumbai suburbs and Thane district. ATL is Indias largest private transmission company with a portfolio of around Rs18,795 ckt kms of transmission lines and more than 40,001 MVA of power transmission capacity. The company has an ambitious target to possess 30,000 ckm transmission assets and achieve distribution capacity 4.5 MVA per customer by 2026.

Operating history

ATL earned incentive payments for maintaining network availability above regulatory requirements, i.e. average availability of 99.70% in FY22.

Human resources

ATLs human resource practices helped reinforce market leadership, The Company invested in formal and informal training as well as on-the- job learning, It emphasised engagements with employees by providing an enriched workplace, challenging job profile and regular dialogues with the management, The Company enjoys one of the highest employee retention rates in the industry; it creates leaders from within, strengthening prospects, The Companys employee base stood at 11,178 as on 31st March, 2022.

Internal control systems and their adequacy

The Company had strong internal control procedures in place that were commensurate with its size and operations. The Board of Directors, responsible for the internal control system, set the guidelines and verified adequacy, effectiveness and application, The Companys internal control system was designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations, and the protection of the Companys assets. This was to timely identify and manage the Companys risks (operational, compliance-related, economic and financial),

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be forward-looking statements within the meaning of applicable securities laws and regulations.