The stock market boom may have driven the personal wealth of many Indian businessmen to record heights, but the biggest beneficiary has been Gujarat-based infrastructure-builder Gautam Adani, whose kitty swelled 152 percent to Rs 44,000 crore in the space of just one year.
According to Times of India report, Adani is the newest entrant in the list of 10 richest Indians, which was released today by China-based luxury publishing and events group, Hurun Group (Mukesh Ambani retained the pole position). It makes official what we already know: Gautam Adani is now one of the biggest players in India Inc. And here’s how he got there.
Adani today is not only India’s largest private trader in coal but is also the country’s biggest port operator. His skyrocketing success as a businessman has relied upon deep government connections and the ability to navigate the political economy with purpose – even as he has drawn bitter criticsm. Adani’s rapid ascent to the top tier is often associated with the rise of India’s prime minister Narendra Modi.
In just 12 years, Gautam Adani has built a billion dollar empire out of Gujarat, a period that coincides with Narendra Modi’s stewardship of the state. From an import-export trader during the 1980s when the government tightly controlled trade and industry, Adani Adani has expanded his trading business into a Rs 75,659 crore empire today.
The numbers tell the story here: Ever since Modi became the chief minister of Gujarat 13 years ago, Adani Enterprises has grown from a penny stock worth just Rs 5 to Rs 786 today. In the last one year, ever since Modi was declared the BJP’s prime ministerial candidate (13 September 2013), shares of Guatam Adani owned Adani Enterprises has jumped a whopping 265 percent while the company’s turnover has risen over 20 fold to Rs 55,067 crore.
During Modi’s tenure as Gujarat CM, Adani constructed its Special Economic Zone, bought mines in Indonesia and Australia to ensure it had a steady supply of coal for its thermal power plants in India and launched his crown jewel— Asia’s largest coal import terminal in Mundra in the Gulf of Kutch, which now handles everything from automobiles to coal for power plants. A cash cow, political opponents claim, that is fed and watered by the government which favoured Adani with cheap land.
Adani, however, has denied these allegations, telling CNN-IBN in April that he bought the land for an average of Rs.15 per square meter, and that he paid as little as Rs 0.1 per square meter for land when the Congress party ruled the state in the 1990s. Adani said it wasn’t fair to compare the value of the land before and after it was developed.
“Adani group has been buying land ten years before Modi came to power, under the then Congress regime, and has been developing Mundra port since then. Land was then purchased at Re 1 per sq metre. Under the Modi government, we have brought land at Rs 15 per sq m. All this was non-agricultural and barren land on which development costs were considerable. There was no preferential treatment,” he told CNN IBN.
He acknowledges that his empire has certainly benefited from Modi’s emphasis on economic development, but dismisses the notion of undue favours. The way Adani sees it, working with the government does not make him a crony-capitalist.
“Crony capitalism should not be there. I definitely agree with that. But how you define crony capitalism is another issue,” Adani, had said earlier this year in an interview to Reuters. “If you are, basically, working closely with the government, that doesn’t mean it’s crony capitalism,” Adan said, whose companies account for the significant part of the infrastructure that has helped make Gujarat an industrial powerhouse.
As this Outlook article notes, “many would argue that Adani’s success is the ‘Indian way’—of moving from trading to logistics, dreaming big and building scale in a very organic manner. Anyone who works in the infrastructure business will tell you that corruption is a given, and suitcases with cash are ferried about.” In other words, nobody in India becomes big without political clout, which is why even though Gujarat is a magnet for investment, it is also often criticised for excessively favouring select industrialists like Adani.
State patronage may be the price of doing business in India, but it doesn’t always make for good policy. The other persistent charge is that the Modi government looked the other way while Adani built massive infrastructure projects in Gujarat without getting environmental clearances. Adani had had a major run in with activists for violating the Coastal Regulation Zone rules, illegally clearing mangroves and contaminating the water with inadequately treated waste water, which allegedly led to considerable damage to the coastal areas within the Mundra SEZ.
Adani’s sprawling SEZ in Mundra had been in limbo since January when the Gujarat High Court declared it illegal and ordered the companies that had set up factories in there to stop all work. Adani had then appealed to the Supreme Court, which refused to stay the lower court’s decision, but allowed them to continue existing operations but restricted further expansion and construction. The apex court also directed the Union environment ministry to decide on a clearance to Adani Ports and Special Economic Zone.
However, two months after Modi came to power at the Centre, the government granted environmental clearances that legalized it. On July 16 the union ministry of forests and environment (MoEF) granted environment clearance to the special economic zone. The union government also accorded coastal regulation zone (CRZ) clearance to setting up of desalination plant, sea water intake, outfall facility and pipeline.
But such question marks aside, Adani’s skills as a businessman are unparalleled and his success has been well-earned. A college dropout and self-made entrepreneur, he has a track record of executing projects within time and without any cost overrun. And in a country where industrial wealth is often inherited, Adani has built a power, mining and ports giant with revenues of $ 9 billion and he shows no sign of stopping. Aiming to become India’s largest private power company, Adani recently announced plans to set up a Rs 12,500 crore power plant in Odisha. The conglomerate plans to generate 1,000 megawatt (MW) of electricity by 2017 in Odisha, ramping up to full capacity by 2019. It currently imports about 100 million tonnes of coal a year mainly from Indonesia to feed the plants but its inbound shipments of coal could double by 2020.
In other words, there’s every reason for the other men on that top ten list to feel very, very nervous.
With inputs from Reuters