Good day, ladies and gentlemen. Welcome to the Adani Enterprises Limited Q4 FY 2022 earnings conference call hosted by Centrum Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If you need assistance during the conference call, please signal the operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Shah from Centrum Broking Limited. Ashish, over to you, sir.
Yeah, thank you, Lizan. On behalf of Centrum Broking, I welcome all the participants to this Q4 FY22 earnings conference call of Adani Enterprises Limited. We have from the management team Mr. Vinay Prakash, Director, Adani Enterprises Limited and CEO, Natural Resources. We have Mr. Robbie Singh, CFO, Adani Enterprises Limited. Adani Solar management team, Mr. Saurabh Shah, Finance Controller, and Mr. Manan Vakharia, Investor Relations, Adani Enterprises Limited. I will hand over the call to the management for their opening remarks, and after which we'll come to the Q&A session.
Hi, good afternoon. This is Robbie Singh, CFO of Adani Enterprises. I welcome you all to the earnings call to discuss financial year 2022 and quarter four results. AEL continues to create value for the shareholders as a successful incubator for the past two and a half decades, and in this journey has recently listed Adani Wilmar in January 2022, which has further increased the return for our shareholders. This incubation model in the past created leaders in their respective spaces like Adani Ports, Adani Transmission, Adani Green, Adani Gas, and has delivered returns at a compound annual growth rate of over 57% to shareholders. As our established business, businesses continue to sustain long-term growth, we are making significant progress in attractive incubation pipeline comprising of Adani New Industries, airports, roads, data center businesses, which will further accelerate value creation for our shareholders.
While the growth story continues, validating our efficient capital management program, AEL's credit rating has been upgraded to A+ for long-term credit lines and to A1+, highest rating for short-term credit facilities by CARE Ratings. Now just for a quick update on our developing business. In our airport portfolio, we achieved financial close for the greenfield Navi Mumbai International Airport project with State Bank of India for the entire debt capital of INR 12,770 crore. Additionally, we recently completed the refinance program for Mumbai International Airport Limited of INR 7,700 crore. With these two steps, our first stage one of the airport capitalization program is now complete. Further, the number of passengers handled during quarter four FY 2022 were at 12.4 million and during the full year at approximately 37 million. An update on the roads business.
We have received the letter of award for Kagal-Satara Road project, 67 kilometers in Maharashtra on a BOT basis with a project cost of approximately INR 2,000 crore. We have signed concession agreements in January 2022 for the construction and maintenance of 43 greenfield Ganga Expressway projects of 464 kilometers in Uttar Pradesh. Adani New Industries update. In our green manufacturing ecosystem, the cell and module line capacity expansion to 3.5 GW is expected to be fit for quarter two FY 2023. While the wind blade manufacturing turbine nacelle and rotor blades plant construction has started at Mundra. We have also signed an MOU with Ballard Power Systems to evaluate investment case for commercialization of fuel cell manufacturing in India.
This is the start of our green hydrogen ecosystem, for which our chairman had announced an investment of $50 billion in renewables to focus on the decarbonization of the industrial sector. Coming to financial performance, the consolidated total income for financial year increased by 75% to INR 70,433 crore and consolidated EBITDA increased by 65% to INR 4,726 crore. This is right across our resources, natural resources, airports, roads, all businesses performing to a level as indicated in our last annual report. Consolidated attributable profit after tax stood at INR 777 crore. I'll take this opportunity now hand over to the CEOs of respective business lines within AEL. First, for our mining services business, Mr. Vinay Prakash. Vinay, over to you.
Thanks, Robbie. Adani Enterprises is the pioneer of mining concessions in India with an integrated business model that extends across developing mines as well as the entire upstream and downstream activities, provides a full service range right from seeking various approvals, land acquisition, mine work, developing required infrastructure, mining, beneficiation on site and subsequently delivering coal to our customers at points within CPP. The company has nine coal blocks and two iron blocks with peak capacity of 100 million metric tons per annum. These eleven projects are located at Chhattisgarh, Madhya Pradesh, and Odisha. Out of these projects, we have operationalized one coal mine, which is Suliyari, it is now operational.
With this, out of eleven blocks, AEL has now four operational mines, which is PEKB, Parsa East and Kanta Basan, Gare Palma III mine, Talabira II and III mine, and Suliyari coal mine, and one operational iron mine that is Kurmitar Iron Ore Mine. In FY 2022, mine production volume increased 58% to 27.7 million metric tons year-on-year. Coal dispatch increased 58% to 25.2 million metric tons year-on-year. In FY 2022, EBITDA stood at INR 1,076 crore vs. INR 1,063 crore in FY 2021. The commercial mine front, two of AEL subsidiaries have been declared with successful bidders. Commercial coal mines at Bijahan, which is in Odisha, and Chandkhari East in Madhya Pradesh. With this, AEL has now total portfolio of six commercial mines across four mineral states of MP, Jharkhand, Chhattisgarh, and Odisha.
Coming to iron, which is Integrated Resource Management business. In terms of iron business, the company provides end-to-end procurement and logistics services to its customers. We have developed business relationship with diversified customers across various end user industries. Iron business continues to maintain leadership position as the number one player in India. The volume in FY 2022 increased by 2% to 64.2 million metric tons. In FY 2022, EBITDA has increased two times to INR 1,368 crores. Thanks. Now, leave it to for solar discussion.
Good morning to all of you. Mundra Solar PV Limited has established India's largest vertically integrated solar photovoltaic manufacturing facility of 1.5 GW. This has been in operation since the last five-six years. We also have the state-of-the-art advanced plant along with research and development facilities within the electronic manufacturing cluster facility in Mundra. Mundra Solar Energy Limited, MSEL, is in the process of setting up a new plant of 2 GW capacity of solar cells and solar photovoltaic panels with a mono PERC technology. This plant will be capable of manufacturing high efficiency modules of higher wattage in the range of 530-540 W, both monofacial and bifacial.
The entire facility, solar cells and solar photovoltaic panels of this plant, this is expected to be commissioned in Q2 FY 2023, in the coming six months. In terms of financial performance highlights, EPC during Q4 FY 2022 stood at 304 MW versus 376 MW in Q4 FY 2021. The EBITDA during Q4 FY 2022 stood at INR 73 crore versus INR 207 crore during Q4 FY 2021. The reduced EBITDA is primarily on account of disruption in the domestic as well as international market, increase in cost of raw materials and commodities and resulting fall in demand. The solar sales volume during FY 2022 stood at 1,104 MW versus 1,158 MW during FY 2021.
Again, similar reasons as the rising costs. EBITDA during FY 2022 stood at INR 379 crores versus INR 1,858 crores during FY 2021. The reduction in EBITDA is mainly due to the significant increase in the raw material and commodity prices. Demand emanating, specifically mentioning about CPSU since it's a very large market. The demand emanating from CPSU tranche was serviced by Adani Solar in H2 of FY 2022, as was communicated earlier. There is still some demand from the same tranche of orders which will continue to be serviced by Adani Solar in FY 2023 also. Additionally, CPSU Tranche 3 aggregating 6.2 gigawatts of AC capacity has already been tendered out to CPSUs like NTPC, SJVN, NHPC, SECI, etc.
The demand for the modules of almost 9 gigawatts, this 6.2 gigawatt AC capacity will be seen in FY 2023 and FY 2024. Adani Solar with its integrated cell and module line will be well poised to make the best of this large emerging demand. The Government of India has announced imposition of BCD on imported cells and modules with effect from first of April 2022, and this levy of BCD in the long term shall give a boost to the domestic manufacturing facilities. Thank you.
We open for Q&A now.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone wishing to ask a question, please press star then one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants will be requested to mute handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions are assembled. The first question is from the line of Mohit [inaudible] from DAM Capital. Please go ahead.
Yeah. Hi. Good afternoon, sir, and congratulations on a very, very good quarter and ramp-up in various businesses which you've seen during this financial year. My first question is that how much is the contribution of Australian coal mines in this quarter, and is it part of the IRM segment? How do you see the ramp up in FY 2023, and how much was sold in FY, TQ for FY 2023?
Vinay, can you please answer?
Oh, Mohit, as far as the Australian production is concerned, now we are slowly coming on the better numbers. It is financially FY 2023. We are planning to cross beyond terminal in terms of exports out of Australia. We did first shipment in January, the second shipment in March, which eventually came in April. Now in May onwards, we are planning to have four shipments a month, and then moving it to five or six, and then seven shipments a month with the Q3 results.
Okay.
Just to elaborate, for all practical purposes, contribution of the Australian business will flow in from the second quarter in real terms. In the current numbers, we don't have much meaningful contribution from the Australian mining operation, especially the commercial mining business.
How is the capital, the gross capital expenditure in this mine, which you have capitalized?
Ultimately, just over $3 billion.
Understood, sir. Now the mining, especially on the mining services, the MDO operation, what is the expected volume or ramp up of mines in FY 2023? FY 2022 was a very good year for us. What is expected Talabira production in FY 2023?
Talabira last year we did 6.7 million tons. This year we have a project of 10 million tons. Considering the current coal prices in India, we expect to increase from 10 to 13 or 15 million tons. We are working with NLC and the local community to see what best we can do. 10 million is for sure going to become something from Talabira.
What's the other mines, sir?
Other mines, PEKB, even though we have reached the peak of 15 million tons as desired by MoEF and MoC, but with a lot of technology initiatives, we have proven that the capacity can be increased further. We are happy to tell you that we have been given a confirmation approvals from MoEF and MoC and customer to increase the capacity from 15 to 18 million tons. We'll be moving from 15 to 18 million tons as far as PEKB is concerned. Suliyari, which started production last year. We get to achieve the peak capacity in the first semester, which is again going to be a very big milestone for our coal industry. As far as GP3 is concerned, we did 450.7 or 450.8 million tons last year.
This year we'll touch the peak of 5 million tons. We hope to start one or two mines more in this financial year. One commercial mine and for sure one MDO which is larger. With everything together, we should be close to 40-42 million tons.
Understood, sir. Considering the coal trading business, are we seeing higher inquiry for coal trading given the coal shortages across the country? Or do you think it will be flat, given that the coal prices are way high?
There's a huge requirement coming from the power sector. At these prices, the requirement of, the other industries, the small industries like textiles and all are low. In terms of power sector, the quantities, the requirements are huge requirements. It's becoming too difficult now for anyone to complete those requirements also. A lot of requirements are coming from the power sector. The steel and, cement sector and the fertilizer sector which, are shying away from, coal imports, in recent past because of the high prices. It's coming back now because in India, it was fueling the exporting portion to supply coal to them, and that's supplying everything to power sector. They are also coming out with better inquiries of import coal.
If you ask in one line, yes, we have a huge requirement coming out from everywhere except small industries.
Understood. Lastly, the solar manufacturing business. We have seen a bigger contraction, margin contraction in FY 2023 if we compare to FY 2021. How do you see, you know, FY 2023, especially given that it's a large part of your EPS contribution? The related question is that you have received LOA from Government of India for our integrated capacity from polysilicon to module. We have heard that the government is trying to revisit the parity-based PLI. Have you heard anything on the timeline?
Sorry, I'll answer that. I think the best way to look at it is that our entire enabled manufacturing ecosystem is part of Adani New Industries. It is built entirely to respond to the requirement of Adani New Industries which will be establishing and which is in the process of developing, as I mentioned in my opening comment. $50 billion of total investment for the purpose of production of green hydrogen, and then hydrogen into products. We are not for the purposes of the manufacturing element of Adani New Industries, which is the solar manufacturing and fertilizers, batteries, fuel cells. We're not reliant on government contracts for that segment. Although our normal sales will continue to various government markets.
Now that the integrated plan of Adani New Industries has been activated, the question would be more relevant previously when we were just a solar manufacturing business.
Understood, sir. Is it correct for the new integrated capacity which you're looking at?
We've put in, you know, our total investment in the hydrogen chain will be in the order of, you know, just $45 billion. We will need this and more than this capacity.
Okay. Understood. Anything on the EBITDA margin outlook for the solar manufacturing in FY 2023 and the-
It's not now any longer a relevant question because it's part of the Adani New Industries ecosystem.
Understood, sir. Thank you, sir. Those were my questions, sir.
Okay. Thank you.
Hi, [inaudible]. The next question is from the line of Nikhil [inaudible] from DAM Capital. Please go ahead. Nikhil, your line is on the talk mode. Please go ahead.
Hello.
Yes, sir. Please go ahead.
Thanks for giving this opportunity. Two questions. First one on airports. To what extent has revenue increased for the airports? Have you started sharing revenue with the Airports Authority of India and are there any plans for further monetization?
No, in fact, you specifically refer to miles because in other airports, it's a per passenger fee which we pay on per passenger basis to the Airports Authority of India. On the revenue share, yes, I think so over the next financial year that would start. For second question,
Should I repeat the question?
It's a monetization aspect. We'll come out with it. It's more than monetization. It's for how we develop the consumer non-defensive consumer facilities at the airport complexes. That we come out over this year progressively as they develop the airports there.
Okay. Understood. Next question is about Adani Wilmar. Do you have any plans for further reduction in stake?
No. It's we are required by law to reduce the shareholding from promoters to 74%, which we have done as step one. Beyond that, we don't have any specific plan to reduce our shareholdings.
Okay. Understood, sir. Sir, my last question is about data centers. You mentioned the data centers. What should we expect the capital expenditure towards it and what will be the capacity?
Data center CapEx, we expect to be in the order of about INR 4,000 crores, INR 4,200 crores. It's $600-odd million. From a capacity point of view, our target business plan is of 300 MW, which we are working towards.
300 MW. Sir, one final question. What will be the execution of road projects in FY 2023? The worth of it, the value.
From completion point of view, we would expect to start completing or reach a full completion on approximately four of our projects, and more likely, three or four near completion. All three would be the HAM projects, Gwalior, Suryapet, and Mancherial. We would be near completion of the Vijayawada this year.
Okay. Sir, can you give us a rough figure about the value of these contracts?
Just give me one second. I'll give you our statistic on the sheet. Just one second. To give the total project cost of the first three which are nearing completion is just about INR 1,900 crores.
Okay.
We are nearly finished on majority of them. There are few hundred crores left to complete. Like for example, Gwalior. We'll have this left is about INR 990 crores.
Okay.
On the Vijayawada project, cost is INR 1,248 crores and about 20% of it is completed, and we expect it to be near completion in the following coming year.
Understood. That's all from me. Thank you.
The next question is from the line of [inaudible] from Morgan Stanley. Please go ahead.
Hi, sir. Thanks for taking my question. I just had a more medium-term question, and apologies if this is covered in the opening remarks. Sorry it's a bit late. So across the several growth businesses that we embark on, whether it's road, airports, data center, new industries and digital, we've outlaid some CapEx for 2025 and 2030. Just want to understand next three years, I mean, what's the total CapEx that we are likely to incur across these businesses? And if we can have some color around the funding plan for the same. And the second one was just around airports. So we saw the release on the closure of the debt today morning.
Just want to understand the performance for the same, which I think that part if I missed it, if it's already in the press release. Sorry about that.
No, thank you for your question. Our CapEx for the next two years, where we have the full clarity in terms of near certain numbers, is approximately $5.1 billion this coming year and $5.3 billion in the next year. Then, from there onwards, in the following five years, we will have a CapEx of approximately $49 billion. In relation to how we fund it, everything is because the aggregate numbers are quoted on a project-by-project basis. So, you know, data center has its own capital management plan, as does airports and Adani New Industries. So, we can run through if you have questions on any one of the individual plans.
We follow the like example on the toll road projects which are concession-based projects, you know, HAM projects. Generally speaking, the equity ratios are about 55/45. One of from this point of view, as just come to your airport question that you said, we recently announced the completion of the U.S. EBITDA transaction for Mumbai Airport. It's at a coupon of 6.6%. It's a seven-year term. If you look at the last three completions at Adani Airport Holdings, which is part of Adani Enterprises, for construction we've used banks like Indian Bank. For ongoing funding, we've used U.S. private placement paper. For Adani Airport Holdings to continue the CapEx program, we've used international banks.
Too, all three are in the mix, global capital markets, domestic banks, global banks, and this country remains a source of capital. Plus our own equity that is required for the projects which AEL itself has sufficient free cash flow to fund these activities. In addition, AEL has recently announced a primary equity transaction of INR 7,700 crore with International Holding Company. That forms the part of our ongoing equity program to fund the various growth initiatives within AEL.
Just a follow-up on that. About $10-$10.5 billion over next couple years that you propose to spend, a large part of that would be towards airports and new industries. If you'll probably give a high-level split. How much would be total equity requirement here, which would be funded either internally or through equity base, at least for the next couple of years?
We've already raised enough equity to fund the activities plus AEL's cash flow. For example, out of the $5 billion next year, $1.3 billion is approximately in the Adani New Industries, and $2.6 billion is at airports. That's the major chunk of it. Road business will take about $1.2 billion. The following year, Adani New Industries will be close to $2.7 billion. The airport business will be about $1.6 billion. Roads will drop back to about $1 billion for on $5.3 billion. Progressively Adani New Industries on the following five years, Adani New Industries will give up $41 billion of the CapEx, airports being $4.3 billion.
Over four-five years, the majority of the CapEx will be in Adani New Industries.
Okay. Just, if I'm allowed to ask this on New Industries, how should one think about the ROC profile? I know, I mean, it's evolving sector, but when you're making the business plan, I mean, what is the thought process? How are you working through the various moving parts as the government policy measures continue to get announced? How should one think about return profile in this business?
This is the hydrogen. It's two-part business. It's infra plus energy. On the infra, we expect to have a weighted average cost of capital and achieve that which is closer to 15%. On the energy side, closer to 20%. We will hit those targets. The entire business plan is based on achieving these targets and therefore also, it's a derivative into our price. The hydrogen. Our target is to produce one kg of hydrogen at one.
Last question, if I may ask. Like, the aspiration would be how much of the market would you be, like, 20% of the market or more than that number in 2025 or 2030?
No, it's not market share we are chasing here. What we are chasing here is the lowest cost, lowest green hydrogen price. Market is very, very large, so we are not chasing the market share. We are just chasing our own capacity. Our first plan, the chairman announced of $1 billion will produce 3.3 billion tons of hydrogen. That's a small part of the global market.
Perfect, sir. Thank you so much.
Thank you. We'll move on to the next question. This is the line of Rohit Kothari from GeeCee Holdings . Please go ahead.
Congratulations, Robbie and the team on a very eventful fundraise, both at the preferential level as well at the airport level. Robbie, just if you can throw updates on various projects at the holding company level which we are undertaking. Number one is the PVC and soda and the copper smelter. These two would be cash generating businesses and at what stage of development are these at? Second, on a longer term basis, when do you feel the Adani New Industries would be at the operating level throwing up cash flow? Means when would the investors start looking as investors? When should we price that?
Third, you know, we are presently surprised to see the new cost of funding at the airport. 6.6% is a phenomenal achievement. How should we see the other parts of Adani Enterprises? What should their funding cost be? And how do you see the ratings of Adani Enterprises follow through in the ensuing quarters? And the fourth, for Vinay Prakash, on the coal mining business in Australia. Based on 11 million tons mining this year, and if you can throw light on the capacity you would have over the next three years, what would be the cost and what would be a very average rate we should expect as shareholders of the coal which you would sell, and then approximate EBITDA and approximate cash flow.
Because you know, we feel that would be a game changer in terms of the cash generation. Because all these years we've put in money and this is now time for us to reap. If you can throw a very conservative idea on the cash flows of the Australia business.
Vinay, you take first because then I'll answer the other three questions.
Yeah, thanks. In fact, as far as Australia is concerned, we are trying to achieve annual capacity of 16 million tons in this financial year itself, 2023 itself. As you are aware that currently the coal prices are at their highest level ever. Definitely, we do see a good cash flow. This as Robbie said earlier, it is going to be reflected from September onwards. Now, for the expansion plan, we are resolving logistics issues. Mine is definitely related to the 10 million ton. If we get all the links in place, we can definitely go beyond 15 and may touch 25 equivalent tons in next two to three years' time.
As far as the cost is concerned, we are on track to bring this mine to the first quartile, so we'll be having a very low cost as far as the mining and onward transportation and the port is concerned. You can expect a good cash flow coming from this mine in the future if the price continues the way it is there at current level. Even if it goes down also, you can see a good respectable cash flow coming from Australia.
Vinay, just as a ballpark, if you were to do 11 or 12 million tons, rough cost of $50-$60 and a rough $130-$140 as a medium-term realization, $70-$80 on 11 million tons. Is this a fair assessment to make? Like, you know, it's very difficult to project coal prices, but would this be a reasonable metric to put forward in our models today, or I'm way off the mark?
The volatility in this market is 30%-40%. Saying that, you know, we can discuss about the cost, whether it is $50, $40, $60. In terms of selling price, whether it is going to be $140 or $120 or $100 or maybe $100-$200 also, it depends on what is happening in the market. Yesterday the market had gone up by $25 per ton in one single day. The market had crashed by $100 in single day, and had gone up to $100 in a single day. Yeah, with this,
I think a long-term average of $50-$60 a ton is possible. You know, sometimes it's 100, sometimes it's 40. But $50, is that a sustainable average to take over a four-year, five-year period?
It's difficult to say because, you know, as of now, we do see this going on for at least one year or two years considering this change in the geopolitical situation. What happens tomorrow is something which we need to see. As of now, the prices should be in excess of $100 for sure. Now, whether it will continue beyond the year is something which is going to be anyone's guess. Nobody was knowing that oil prices will touch $100.
Thank you. Thank you, Vinay. Robbie, if you can answer some of my questions, it'll help.
I think the metals business which are basically trying to maximize the use of the facilities within our Mundra ecosystem, SEZ ecosystem. We expect the metals cash flow to commence. All constructions underway. Both copper and PVC cash flows commence from 25-26 onwards. We should see that in our cash flows coming in from 2026. They will be significant cash flow contributors because of the products that they are in. The Adani New Industries timing is pretty much on track. We should have the first hydrogen somewhere in 2025-2026. The update period we are on track to do that. As I said, the work has commenced, it's going on full speed.
That will be the first steps towards the first 1.1 million-ton capacity. The first phase itself will be over close to 150 kgs. That should be around the 2025, 2026 period. In relation to the overall earning expectation, yes, to complete this transaction during this Ukraine European issue at look-through prices is great for the airport business. We continue to expect that the impact pricing will continue to improve from here onwards as the quality of the airport business and the recovery increases. We already touched approximately 37 million passengers for the platform, and it's pretty much on the domestic side is almost nearly recovered to pre-COVID levels.
In relation to your question related to the acquisitions. Already the AEL's ratings have improved last year, was upgraded last year. If we continue on the track we are, we expect that it will again see a positive credit move. On the short-term rating, it's already at the highest level.
Thank you. Thank you, Robbie. Thank you, Vinay.
Thank you. The next question is from the line of [inaudible] from ESB Investment Managers Limited. Please go ahead.
Hi. Just a broad strategic issue. Are we not attempting too much? Because on one end we have an entire range of activities in the energy footprint. Some of that is structured, some others we are seeking now on the logistics chain and related activity. Then metals activities that we are attempting now, even PVC on metals, on cement. I mean, aren't our hands way too full? Even there a possible risk of attempting way too much, whereby instead of our strategic capability and strength giving us an advantage, some of it starts becoming a weakness because of the complexity and very large and too many activities we seek to do.
Thank you for your question. I mean, actually, if you see, our If you look at our CapEx program as outlined, out of 48 billion of CapEx, 42 billion of our CapEx is in our utilities/energy business, which is our new industry. Our utilities, our energy business is still our largest CapEx business. In the transport and logistics space, we are broadly still. Capital risk is broadly still in the two areas that we are core to us, which is transport logistics and energy and utilities. From a volume perspective, that's the two areas we have the highest volume, highest investment, highest CapEx, highest everything, the two core areas. Healthcare, as you mentioned, it is a small investment in the context of the group. For us, it would be around about $5 million and a partner $5 million.
In terms of the other businesses like metals, et cetera, that are again just utilizing excess capacities within our current core ecosystem of energy, SEZ and development. We are not actually going out and trying to seek, for example, areas, utilities, energy costs outside of our ecosystem for our metals business. Here, it is simply being able to get a higher return on our say, for example, port, it becomes a higher return on its SEZ business. For excess capacity in power, it becomes that. That's why Adani Power is able to increase its PLFs by converting some of that power into metals. And similarly, the waste of this area goes into the ancillary industry, so allows us to create a circular economy.
I would say it the following way: If you look at the capital and investment risk out of the $49 billion of CapEx that the enterprise has planned over the next period, plus the existing $10 billion, so approximately $50-$60 billion of CapEx. $48 billion is in energy and utilities. $7 billion is in transport and logistics. Excuse me, $10 billion in transport and logistics. Out of 60 of our exposure, $58 billion of CapEx and investment risk is the two core areas which we've been doing for the past 25 years, which is transport, logistics and energy and utilities. Additional risks that you are highlighting, Varad, are less than 3% of our total investment in those areas.
No, the answer is that is perfectly appreciated that bulk of our risk and rewards are lying in the areas where we have really demonstrated track record of delivery and core competence. I'm saying strategically, in terms of time and energy, in terms of management vision and execution. When we get into too many areas, capital relatively is less important of the four factors of production. I think the key factor I would say is entrepreneurship, which is what the group exemplifies. I'm saying when we get into far too many areas, is our strategic bandwidth breaking things down? Whether it is repercussions on areas potentially where we have largest investment.
In other words, strategic thinning out of the strategic bandwidth, can it adversely impact on the areas where, financially and economic value creation, we have maximum stake?
No, that's a very, very good question, actually. What I can assure you is that this is one of the biggest areas, which is organizational capability that we spend a lot of our time on. I myself, I mean, today I'm here as AEL CFO, but I'm also group CFO. This is a massive area of attention that is organizational capability. The same area is also a massive area of interest to promoters and to Gautam Adani himself. We are acutely aware of this. We are very careful even at one or two points of our capital, but we are very careful as to what exactly we get into.
If you look at metals, we are basically getting to metals which are primarily an energy story. There we are deploying our excess energy resources that various of our portfolio companies already have. Excess land various of our transport and logistics companies have. We are deploying that excess capacity into an adjacent area where we believe that we can execute kind of first-quartile cost basis and the lowest-quartile cost basis. Your central thesis is that one of as we grow, one of the core areas of tension we should have is on the organizational capability, strategic capability, and we are very much focused on this aspect, and we are very mindful of this risk.
I assure you and our investors that this is a central risk assessment, risk management factor for us when we consider something. That is, how do we support that from both strategic perspective, policy perspective, risk perspective, and also the organizational capability perspective. We are very mindful. I don't have an answer as to yes, no to your question because it's a very, very important question. It's an ongoing question, a continuing management question. We are very much focused on this area.
Sure. Just one last, supplemental question to the main question. Rationally speaking, while I understand the metals is like a continuum of our energy activity, and metals is a way of expressing that energy into another form, utilizing the same technology, resources and converting into an alternate form. There is that strategic fit there. Cement, medical, today, just one has to so many of them.
We are in two core sectors of infra, Varad, to answer your question, which is transport, logistics, and energy and utilities. We, as an infra, see healthcare is a possible third infra, which, for a country like India, growing country, young country, is a massive growth area for infrastructure. We have to evaluate whether we can develop a third core infra platform. Now, we understand that to start off with is likely to be a partnership. It's not something that we will do ourselves. That's first part of it. It's a core infra for India, and we will stay with the core of India. Yes, it's a new infra vertical we will look at.
That is, as a growing group, if we are able to deploy capital, we continue to deploy capital to core infra. That's number one. In addition, cement and all, it's too early to comment. Once we are ready with it, or we actually have formal announcements in relation to how we visualize this in the medium term, I will come back to you. I just wanted to clarify on the health part.
Sure. No, thank you very much. Always a delight to hear your perspectives.
Thank you very much. Thank you.
Thank you. Next question is from the line of Mohit [inaudible] from DAM Capital. Please go ahead.
Hi. Thanks for the opportunity once again. Sir, my question is that what explains the increase in revenue in the entire airports quarter on quarter because our PAX passenger numbers were down QOQ?
That was simply one event issue of January Omicron change. That's all.
No, no, sir. My question is that, the revenue has gone up, but the passenger numbers are down, right? What explains the increase in revenue that has been done for the airport business?
That is basically part of the business plan of the airport because largely because of the fact that the gross spend rate, which is a key metric, is rising. We expect that as we continue to improve services at the airports, we expect the gross spend rate to improve. The base case of that will be when we complete the first round of CapEx. As we outline the full-scale development of the airport business over the next three years, we will give much more granular outlook into the gross spend rate target and how we are looking at various consumers available.
Are you saying that the non-aero revenues has grown faster QOQ? Is that the right understanding?
Broadly, it's basically the underlying thinking that the spend rates per passenger or non-passenger visiting the airport is rising.
Understood, sir. Secondly, on the Adani New Industries businesses, when we speak about hydrogen and fuel cell, are you looking at the full gamut of hydrogen, fuel cell, lithium battery, and are you looking to export? The related question is that as far as hydrogen is concerned, are you looking to put up a manufacturing capacity for the electrolyzer, or are you looking to set up and develop the hydrogen or sell hydrogen to the market? I heard that 1.1 billion tons. Is that number right? 1.1 billion tons seems to be a very, very large number for setting up the hydrogen development.
No, actually, our investment plan is the chairman announced is $50 billion of investment. That will be 3.2 million tons. Our phase one is 1.1 million tons of hydrogen. Our primary, I mean, Adani New Industries' primary focus will be production of green hydrogen. So pure green hydrogen, not blue or gray hydrogen, but green hydrogen. Within Adani New Industries, in the manufacturing side, yes, we have the manufacturing division and manufacturing and we build manufacturing electrolyzers and integrate electrolyzers. But the primary focus, 90% of the investment will be in the production of green hydrogen.
Understood. Are you looking to export all this green hydrogen or are you looking only at India as your market?
That aspect in relation to budgeting is probably best addressed because it will be giving statement that we are not yet outlined to the market. It is best next quarter or the quarter after when the full-scale plans will be made public.
Understood. Lastly, sir, if and when you decide to expand Carmichael, you know, capacity, how much the incremental CapEx will be required to upgrade the mining capacity based upon 10 billion tons to 14 billion tons? If I remember, the original number was 16 billion tons of production.
We have no plans to expand capacity at this stage. They will come to that very quickly when we get the necessary approvals.
Understood, sir. Thanks and all the best, sir. Thank you.
Thank you. The next question is from the line of Subrata Sarkar from Mount Intra Finance. Please go ahead. Subrata Sarkar, your line is on the talk mode. Please go ahead. As there's no response on the participant line for the last question, I now hand the conference over to Mr. Ashish Shah for his closing comments.
I would like to thank the management of Adani Enterprises for giving us the opportunity to host the call. Thank you to all the participants for participating in the call. Thank you. Any closing comments from your side, sir?
On behalf of Adani Enterprises and Adani Group, we wish to thank you everyone for participating.
Thanks, Ashish, for arranging this. Thank you so much.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, on behalf of Centrum Broking Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.