“The way they have grown from a trading firm in Ahmedabad to a conglomerate with so many verticals and good diversification -- the journey is amazing,” said Umesh Mehta, head of research at Samco Securities in Mumbai. “They had a futuristic vision to build a business with growth potential and that would help India in some way, that had the blessing of the government.”
Adani rose through the ranks just as Modi, also a Gujarati, gained power. The businessman began commercial operations of the Mundra port and built its industrial zone when Modi was the state’s executive head and has been one of the politician’s key supporters for almost two decades.
The billionaire’s rapid diversification started around 2015. When Modi pledged to develop the local manufacturing of defense equipment, he quickly built the capacity to supply the military by partnering with defense contractors. Three years later, a push into gas eventually turned his empire into India’s largest retailer of the fuel in the private sector. In 2019, he started focusing on airports, and now he’s trying to enter sectors including data storage and financial services.
“Modi’s policies have helped business groups since his Gujarat days and that has contributed to the rapid growth of conglomerates such as the Adani Group,” said Indira Hirway, director of the Centre for Development Alternatives in Ahmedabad. “Melding corporate strategies with government priorities -- that’s the way of doing business in India.”
While Adani is doing well in his home country, he’s faced opposition and criticism in Australia, where the Stop Adani movement gained traction as lenders turned away from the controversial Carmichael coal project. It even became an election issue in the 2019 parliamentary vote, and last month Adani Enterprises renamed its mining arm in the country in a move that some saw as a way to distance the conglomerate from the development.
The unit’s chief executive officer said then that the quality of the mine’s coal is better than what’s currently in the market and that it will lead to fewer emissions when producing electricity.
That hasn’t stopped the conglomerate from growing, and the fast expansion has led to more than $17 billion in debt, according to a local report in May citing its group chief financial officer. It has been able to keep raising funds, in part by pivoting to green energy and increasingly borrowing from overseas banks.
For international investors and global energy majors trying to expand their renewable portfolio and get a piece of the lucrative Indian market, Adani’s empire is attractive. France’s energy giant Total SA has already invested in Adani Green and distributor Adani Gas Ltd., while Italy’s Snam SpA is working with the group on a strategic collaboration to explore opportunities in hydrogen and other cleaner fuels.
“As an entrepreneur, Adani has extraordinary conviction and ability to scale up after taking a calculated risk,” said Deven Choksey, managing director at KRChoksey Investment Managers Pvt. “For international investors, they can’t miss Adani, who is already sitting on cash-generating assets in a growing market like India.”
This article was provided by Bloomberg News.