Adani Group Not To Invest In New Road Projects, To Focus On Maintaining And Executing Existing Portfolio In Highway Sector

Adani Enterprises will not make fresh investments in new road projects till the current volatility around its share price, sparked by a report by US-based short seller Hindenburg Research, settles.

The embattled conglomerate will focus on completing existing projects, including Ganga Expressway, before embarking on any fresh capital expenditure.

Adani’s roads transportation business includes at least eight hybrid annuity mode (HAM) projects, five build-own-transfer (BOT) projects and one toll-operate-transfer (TOT) project across ten states in the country with more than Rs 41,000 crore of projects under management with at least 5000 km of lanes are under maintenance and construction. The group nursed ambitions to emerge as a leading road transportation player.

As a part of its new approach to the highway sector, Adani Road Transport, a wholly owned subsidiary of the ports-to-power infrastructure behemoth, will also not bid for the upcoming eleventh and twelfth bundles of the National Highways Authority of India (NHAI) ’s TOT projects. It had participated in previous TOT bids and even won a few bids.

TOT model was developed to encourage private participation in the highways sector.

Under the TOT model, the concessionaire pays a one-time concession fee upfront (lump sum), enabling the concessionaire to operate and toll the project stretch for the pre-determined 30-year concession period. This model applies to EPC and BOT (Annuity) highway projects, which have completed at least two years after the completion date.

In October 2022, Adani Enterprises, through its special purpose vehicle Adani Road GRICL (ARGL), signed an agreement with Macquarie Asia Infrastructure Fund (MAIF). to acquire a 56.8 per cent stake in Gujarat Road Infrastructure Company (GRICL). ARGL was also planning to acquire IL&FS’s 26.8 per cent stake in GRICL subsequently and ultimately have an 83.6 per cent shareholding in the entity.

GRICL was incorporated on June 2, 1999, for developing two-state road projects in Gujarat, Ahmedabad-Mehsana and Vadodara-Halol. The project was on a build, own, operate and transfer (BOOT) basis. 51.6 km Ahmedabad to Mehsana road on SH-41i witnesses significant passenger traffic connecting important northern Gujarat corridor. 31.7 km Vadodara to Halol on SH-87 is on the Delhi-Mumbai Industrial Corridor with proximity to several industries.

The group also acquired 100% stake in Swarna Tollway (STPL) from Macquarie. STPL, incorporated in 2001, is an SPV for implementing a road project in Andhra Pradesh on a build-operate-transfer (BOT) basis.

The road vertical of the group is also currently executing multiple packages of the Ganga Expressway Project that will connect Meerut with Prayagraj, both in Uttar Pradesh. The greenfield expressway is being implemented on a develop, build, finance, operate and transfer basis. Adani Enterprises achieved financial closure for Rs 10,238 crore in loans from State Bank of India (SBI) for the Ganga Expressway Project.