Gujarat industry’s poster boy makes his mark in the global race for energy resources
An Adani Enterprises spokesman explained how the purchase would help expand the group’s power business from 13,000 Mw currently to 20,000 Mw by 2020. Indeed, Adani is now considered one of Gujarat’s leading industrialists, a poster boy for the state’s industry-friendly policies with massive investments in ports, special economic zones (SEZs), coal mining and power, all built on the edifice of a cash-rich commodities trading empire.
Yet, just over a decade ago, Gautam Adani was mostly in the news for the wrong reasons. In 1999, he attracted headlines for his kidnapping by underworld don Anees Ibrahim for reasons that never became clear; his release was allegedly secured by a Rs 3 crore ransom, information that was never confirmed. In 2002, he was detained by the Delhi police charges of cheating in a case instituted by a rival. Before that, he had been under scrutiny for alleged invoicing irregularities and money laundering and still later for possible complicity with rogue trader Ketan Parekh.
Today, the flagship of his Rs 27,000-crore empire, Adani Enterprises Ltd., has been rated among the 50 top performing Asian companies by Forbes magazine. His three listed companies — Adani Enterprises, Adani Power and Mundra Port and Special Economic Zone have a combined market capitalisation that places the group among India’s top 10 business houses. Adani himself was ranked India’s 10th richest Indian in November 2009.
Adani’s rise to prominence reflects the remarkable resilience and chutzpah that characterises the new breed of post-liberalisation industrialists. He cut his entrepreneurial teeth in the shortage economy of the licence raj era, first as a commodity trader in Mumbai, and later as manager of a small plastic manufacturing unit in Guajarat. Faced with an acute shortage of raw materials at the time, Adani built a business importing raw materials India needed (coal, oilseeds, synthetic fibre intermediates) and exporting others (agro and petrochemical products and textiles to name a few).
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Despite a fair amount of opposition from entrenched west-coast business rivals, Adani Enterprises managed to build enough critical mass to get listed on the stock exchange in 1992. Economic liberalisation gave him the space to think big. Mundra Port, one of the country’s first, and now among its most efficient, private ports, and its 100 sq km SEZ, one of India’s largest multi-product free-trade zones, are examples of his ability to convert opportunities into big business. The port currently handles 40 million tonnes of cargo, a figure that will go up to 100 million tonnes once a coal import terminal — the world’s largest — is commissioned in October 2010.
As a mine developer and operator, the Adani Group also operates two coal mines in Chhattisgarh and one in Orissa and expects to produce 70 million tonne a year from all three mines.
Adani Enterprises also owns a coal mine in Indonesia’s Bunyu island that currently produces 10 million tonne a year of coal.
A significant reason for Adani’s success in India has been his ability to tailor his business plans to the political economy. Foraying into ports, power and SEZs was of a piece with the policy focus on infrastructure — though it is worth noting that Adani, 47, has shrewdly stayed out of the PPP adventure.
His proximity to powerful politicians like Gujarat Chief Minister Narendra Modi has probably not harmed his business either. A generous contributor to the Bharatiya Janata Party (BJP), the party in power in Gujarat, his group has been ranked ahead of Reliance and Torrent as the largest business house in the state. It was speculated that Adani bid for the Ahmedabad franchise of the Indian Premier League (IPL) cricket tournament at Modi’s urging, though the bid failed.
But Adani is not the kind of businessman to put his entrepreneurial eggs in one state or party. He also has close links with Nationalist Congress Party leader and Agriculture Minister Sharad Pawar, even attending a July 7 felicitation function that Maharashtra Deputy Chief Minister Chhaggan Bhujbal organised when Pawar became ICC President. Adani has a coal-based power project in Vidarbha, Pawar’s constituency.
In Delhi, Adani also built up a rapport with Kamal Nath during his stint as commerce minister in the first United Progressive Alliance government. As minister of roads, Adani is believed to be taking tips from Nath for his plans to expand his footprint in infrastructure.
The Galilee mine acquisition in Australia marks a significant expansion of Adani’s overseas presence — he’s eyeing more acquisitions in Africa, Asia and Australia. In 1999, he is said to made this bemused comment after he was released from captivity: “I was playing cards with those fellows who kidnapped me. Whatever has to happen will happen and nothing can be done about it.” But Adani has certainly worked hard to shape his own destiny as a new generation business tycoon.