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Adani Enterprises Ltd
Coal Block Gets Environment Clearance
Quick Comment – What’s new: The Environment
Ministry has granted a Stage I clearance for Parsa Kante
block – a 15 MTPA coal block being developed by AEL
on a Mine Development Operator (MDO) model. There
had been dispute about whether the block came in a no
go area or not and the FAC (Forest Advisory Committee)
had rejected this block earlier. However, the Minister
has overruled the rejection by the FAC giving out
reasons for granting the clearance (Exhibit 2).
Impact on AEL: We were building in a 2-year delay
across all the coal blocks of AEL on the mine
development operator (MDO) business and hence this
clearance has no impact on our value / earnings for the
company. However, given the struggle faced by
infrastructure developers on the ground in getting
environment clearances the market was reluctant to
ascribe any value to AEL’s MDO business. Including
Chendipada block, which already has Stage I clearance,
50% of AEL’s coal mining operations now have Stage I
clearance, which we believe will be the trigger for the
market to start valuing this business.
Next Steps for AEL: AEL will have to obtain Stage-II
approval, which is contingent on the state governments’
demonstrating full compliance with the provisions of the
Forest Rights Act, 2006. AEL believes that they should
be able to start taking coal out of the block in the next 12
months (remaining time for land acquisition and setting
infrastructure for mining there).
Investment thesis: AEL’s business focus on the energy
deficit theme, the scale already attained by its various
businesses, and its cash flow and earnings-driven
business make it our top choice to play the infrastructure
developer space in India.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Adani Enterprises Ltd
Coal Block Gets Environment Clearance
Quick Comment – What’s new: The Environment
Ministry has granted a Stage I clearance for Parsa Kante
block – a 15 MTPA coal block being developed by AEL
on a Mine Development Operator (MDO) model. There
had been dispute about whether the block came in a no
go area or not and the FAC (Forest Advisory Committee)
had rejected this block earlier. However, the Minister
has overruled the rejection by the FAC giving out
reasons for granting the clearance (Exhibit 2).
Impact on AEL: We were building in a 2-year delay
across all the coal blocks of AEL on the mine
development operator (MDO) business and hence this
clearance has no impact on our value / earnings for the
company. However, given the struggle faced by
infrastructure developers on the ground in getting
environment clearances the market was reluctant to
ascribe any value to AEL’s MDO business. Including
Chendipada block, which already has Stage I clearance,
50% of AEL’s coal mining operations now have Stage I
clearance, which we believe will be the trigger for the
market to start valuing this business.
Next Steps for AEL: AEL will have to obtain Stage-II
approval, which is contingent on the state governments’
demonstrating full compliance with the provisions of the
Forest Rights Act, 2006. AEL believes that they should
be able to start taking coal out of the block in the next 12
months (remaining time for land acquisition and setting
infrastructure for mining there).
Investment thesis: AEL’s business focus on the energy
deficit theme, the scale already attained by its various
businesses, and its cash flow and earnings-driven
business make it our top choice to play the infrastructure
developer space in India.
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