Adaniupdates, Author at Adani Updates

Mundra: The Making of a Marvel

Those who dare to dream big and are willing to take risks get lion’s share of the reward. Mundra in Bhuj, Gujarat, is testimony to one man’s determination to realise his childhood dream. Standing on the coast of the Gulf of Kutch and marvelling at the infrastructure of Kandla Port, Gautam Adani, then a child, wished to build such a port.

To achieve his goal, he turned every obstacle into opportunity and proved all his critics, who dismissed his idea, wrong. His passion and perseverance led to the creation of a state-of-the art Mundra Port, the largest commercial port in India.

Building a business with resources at hand is one thing but building an empire from scratch is the act of an alchemist. So, first came the jetty that made way for a port, which led to a coal-based power plant that paved the way for the mining business. His ability to combine two things to create multiple assets is a propeller for expansion, and the result is the creation of adjacencies. The Adani Group has now ventured into the manufacturing of solar PVC and modules, and wind turbines. The Fortune brand, produced at Adani Wilmar’s Mundra plant, is a household name.

Twenty-five years on, the giant business at Mundra has changed the entire economic landscape of India and the region. It has injected life into the barren lands, home to the world-famous Kutchi art and artisans. The Adani Foundation’s holistic work for the upliftment of the communities in the region, whether in healthcare, farming, education, women’s empowerment or skill development, is commendable. Through its various initiatives and welfare schemes, it helps to mainstream the locals.

The journey began with the allotment of 15,000 acres of land by the government for salt work. However, Mr Adani was asked to return 13,000 acres within 15 days on the grounds that the said land fell under the forest department. Everyone felt that the project was doomed. But Mr Adani didn’t flinch or feel disappointed while giving the huge piece of land back. Instead, he began to work on a plan to develop the remaining 2,000 acres of land.

It is important here to note that before things started to take shape in Mundra, he had already made his name as a successful trader/ investor with an annual turnover of Rs 300-400 crore.

So, he already had the means to create and did not need to depend on external sources. But the important question was what to build on the 2,000 acres of land? Mundra is one of the most significant coastal regions of Gujarat. It possesses rich prospects for industrial growth and economic development.

He started by putting together a team that would exceed his expectations while delivering their best. Then he consulted several consultants, who told him: “Unless you create a breakwater, building a port in Mundra is impossible.” But even in such a situation, Mr Adani took the risk, invested money, and travelled regularly to Mundra. First came the jetty and then the port.

He successfully created an infrastructural marvel. The mega port at Mundra is a major economic gateway that caters to the hinterland of India with multimodal connectivity. The deep draft, all-weather port is the largest commercial port in India with state-of-the-art infrastructure and the largest coal import terminal, which allows for faster cargo evacuation and minimal turnaround time.

The old saying ‘Whatever happens, happens for good’ has proved true in Mr Gautam Adani’s case. Had he ventured into the salt business, he would not have built this state-of-the-art port, which led to a power plant that led to mining and then there was no stopping.

Too Big To Fail

How Adani plays a vital role in Indian economy and its long-term prospects post-Hindenburg crisis

The entrepreneurial journey of the invincible and resilient man, Gautam Adani, began over three decades ago during which time this first-generation entrepreneur has built a USD105bn+ MCap diversified conglomerate. Focused on sustainable and long-term value creation, the Group continues to work with the twin objectives of further deleveraging and looking at opportunities to expand and grow. The Group’s core strength lies in mega-scale infrastructure project execution capabilities and infrastructure is increasingly becoming central to India’s growth.

Even the Hindenburg report failed to dent his reputation as an industrialist whose business acumen has helped to modernize India. The investors’ confidence that took a hit after the Hindenburg report got a boost after investments by big names like GQG’s Rajiv Jain. On his investment in the Adani Group, Jain had said in an interview with The Australian Financial Review that it was a “safe bet because the conglomerate is irreplaceable as about 25% of India’s air traffic passes through their airports and 25% to 40% of India’s cargo volume goes through their ports”.

In his message to shareholders in July this year, Mr Adani said, “Our balance sheet, assets, and operating cash flows continue to get stronger and are now healthier than ever before. The Group’s strategy has always been to align itself with the Indian growth story, irrespective of who is in power at the Centre, and this has positioned us very strongly for future growth. The banking partners continue to remain aligned with this and look at us as a long-term partner in this journey. Our infrastructure assets generate stable revenues and contribute over four-fifths of the group’s Ebitda.”

The Group’s infrastructure network has grown so vast that it has become indispensable for both local businesses and foreign firms. For instance, MNCs like Tata or Microsoft may use Adani ports or airports for transport and logistics. The large size of the Group also means that any disruption or turmoil may adversely affect the Indian economy. At the same time, the dependence of the Indian economy on Adani could keep its kitty full of profits because continuous use of its assets will result in constant cash flows.

Very early on, the Group focused on seeking control over the value chain and began investing in inter-connected businesses (adjacencies). For example, to run its thermal power plants, ➤ it has acquired coal mines in India, Indonesia and Australia; ➤ transports coal ➤ via Adani ships ➤ to Adani Ports ➤ and finally, to Adani power plants; ➤ which then transmit power to households & businesses.

More than 75% of the Adani businesses are in regulated sectors. In the sectors with the Adani presence, the statutory regulatory framework is independent and mature. According to data compiled by Bloomberg, it has the highest market share in the private sector. Adani companies handle about 43% of all shipping containers, a third of all coal transported, about 22% of private thermal power capacity, the largest number of solar and wind plants, and 51% of India’s private electricity transmission. Adani Ports is the largest private ports operator in India. The conglomerate also owns 300 kilometers long private railway network, besides a rail line in Australia. Adani also plans to build 12,000 km of roadways by 2026 in the country.

After securing the coastline and rail network, Adani spread its wings in the sky. It operates 7 airports that see around 75 million footfalls annually.

Moving forward, the Group plans to make close to 85% of its investments over the next seven years into creating a green energy ecosystem, including transmission lines, transport and logistics. The majority of its future revenue and earnings could come from green space.

Infra Giant Continues to Build & Expand Assets

In January this year, when the Hindenburg report unleashed terror on the Adani Group with its malicious report, the Group not only lost over $100 billion but it also began to be written off by people. The U.S. short seller intended to bring down the Rs. 2.62 lakh crore conglomerate and earn profits through its short position. Mr Gautam Adani’s reputation took a huge hit. Suddenly, he was painted as a fraud and conman whose alleged greed and risk taking brought the fifth-largest economy to its knees.

However, the attempts of the short seller failed to deflate the indefatigable spirit of Mr Adani. It has been nine months now and not only have the allegations fallen flat but the billionaire has also emerged stronger and smarter. The shadow of uncertainty which loomed over the Group seems a thing of the past as Mr Adani has started rebuilding his empire by putting his house in order by “rebalancing its growth ambitions, slowing down on big-ticket acquisitions, deleveraging and strengthening its balance sheet”.

A few weeks after the report was released, the conglomerate began taking steps to comfort investors – from holding roadshows to securing investment from GQG Partners and buying back bonds. It held roadshows across six countries, where the Group’s finance leadership met debtors/bond holders/global banks and FIIs and reinforced the strength of the portfolio, its resilience and the underlying credit quality.

In fact, during this period of volatility, there were no rating downgrades, and all the ratings were affirmed, with some agencies putting a few issuers on a negative outlook. International banks remained steadfast in their support of Adani portfolio companies, driven by their belief in the robust business model, cash flow and strong balance sheets.

GQG Partners, one of the largest emerging market investors, invested $1.87 billion in Adani portfolio companies in the aftermath of the Hindenburg report and has since been a shining example of the turnaround story; the number of shareholders increased by almost 100% from December 22 to March 23. Currently, GQG’s total investments in the Group stand at $4 billion.

On why he chose to invest in the Adani Group, GQG’s Rajiv Jain said in an interview with Business Today, “The Adanis’ asset allocation decisions have been remarkably good. If you buy Mumbai airport or any other airport during Covid-19, when it is likely a distressed sale, the transaction has a high probability of doing well. Another example would be solar modules. They were not in that business even a few years ago. Now, they will be one of the largest producers of solar modules outside of China. If anybody wants to set up data centers in India, who would they go to other than the Adanis? It’s also an electricity business… but the group is one of the lowest-cost producers of electricity in the country. What is also not appreciated is that if India wants to be net zero by 2070, it likely cannot happen without this group.”

Challenges still linger. However, Mr Adani’s rise from being the son of a textile merchant and college dropout to one of the richest men in the world has had its share of challenges and attacks on multiple fronts – from mining operations to power projects and allegations of SEZ norm violations in Mundra. But after each setback, he rose stronger with a determined force to keep building and expanding his assets. “Our balance sheet, assets, and operating cash flows continue to get stronger and are now healthier than ever before,” Mr Adani said while sharing the group’s operational performance with shareholders in July.

India’s infrastructure growth story is the most sought-after story of this decade and Adani’s leadership position in this sector positions it very strongly for future growth. Banking partners continue to remain aligned with this and look at Adani as a long-term partner in this journey. His infrastructure assets generate stable revenues and contribute over four-fifths of the group’s EBITDA. A proxy for cash flow generation capacity, EBITDA shows the group’s core operating performance.

“Over the next 20 years, Adani portfolio companies and promoters want to raise $50 billion of equity. We want to invest close to $500 billion in core infra as a base case. We will run this programme of equity for the next two decades,” Group CFO Jugeshinder ‘Robbie’ Singh told Business Today.

But the new equity comes with higher dilution. The Group also had to make some hard choices. For instance, it recently exited the financial services business and is focusing on its core infra model and adjacencies. “We invest for an intergenerational period, upwards of 30 years. We have not even completed the foundation of our growth. For instance, we are setting up a ports business to be able to handle and move cargo equivalent to what India moves today as a country. We have to remain strategically patient,” explained Singh.

With 10 listed companies, Adani’s sprawling empire focuses on everything from airports (7), train lines, and ports (14 ports/terminals in India + 1 in Israel and 1 under-construction in Sri Lanka) to data centers, green energy, coal mining, cement, and the media.

“We will have close to 14-15 companies by around 2033. We have an objective to hold a certain percentage in our portfolio. Within that portfolio when we recycle capital, it is not dilution,” he said.

Saving Our Shores

Imagine that you are holidaying with your family in the coastal town of Daman. Breaking away from the mundane city life, you head to the beach to swim in the sea and sunbathe on the beach. But what greets you there leaves you stunned and shocked. The beach has disappeared, and the coastal road pavement is damaged. The euphoria of spending fun time with your family evaporates.

This is actually happening to our beaches as climate change is disrupting the natural rhythm of our environment. A substantial proportion of the world’s sandy coastline is eroding and could result in the near extinction of almost half of the world’s sandy beaches by the end of the century, says a study by the European Commission, ‘Sandy coastlines under threat of erosion’.

The study sounds an alarm because erosion is eating into our coastal land. India has lost over 3,680 hectares of land in the last 10 years, as per a study by the Indian Space Research Organisation. We are losing acres and acres of land due to coastal erosion caused by natural occurrences like sea level rise and wave energy and human activities. Most unsafe are those living in these areas because they are not only losing their land but there is a danger to their lives as well. Besides, erosion is also taking a toll on local plant and animal species.

However, efforts are being made to restore beaches by replenishing sediments because the deficit of sediments is the main cause for erosion. Beach nourishment is one of the methods that involves adding sand or other sediments to beaches to increase their volume and protect them from erosion. This process can also benefit the coastal and marine ecosystem by giving plants and animals new habitats.

Adani Ports conducts this exercise as and when required and the communities are also involved in some cases, as with Yarada beach near Gangavaram port. The ports team takes up beach nourishment work as part of its initiative towards the development of community infrastructure. The company conducts regular cleaning activities at the beach.

This technique has several benefits, such as protecting buildings and infrastructure from wave attacks, improving beaches for recreation, creating new natural environments, eliminating the detrimental effects of shore protection structures, and retaining sediment volumes during rise in sea levels.

However, it is important to note that beach nourishments must be regularly inspected and replenished to retain their effectiveness when it comes to flood prevention. Despite this, beach nourishment is still a useful technique in coastal management due to its capacity to develop and restore natural habitats while providing essential protection against erosion and flooding. Sandy beaches are too important to be ignored. Just as we keep adding to our deposits of money in our bank accounts over time to secure our future against unforeseen crises, we need to replenish sediments on eroding beaches to build strong shorelines that can subsist and survive in the face of any catastrophe.

Adani Group’s Global Odyssey

In today’s rapidly developing world, businesses know no borders. Among the conglomerates that have made their mark, not just in India but also abroad, is the Adani Group. Adani Group is indeed an inspiring case study of international growth. From its roots in India, the tale of how Adani became a global powerhouse is one of big ideas, intelligent moves, and relentless hard work.

This blog will talk about how Adani Group is strategically extending its reach in international markets.

Setting the stage: Adani’s Indian roots

Before delving into the Adani Group’s global ambitions, it is necessary to know where it came from. Established by visionary businessman Gautam Adani, it began its journey as a modest trading company in India. It ventured into various sectors, including infrastructure, energy, logistics and others over the years. Its rapid growth and strategic acquisitions paved the way for its international expansion.

Global vision: Diversified interests

The Adani Group started spreading its wings across various sectors with an eye for opportunities and an aim of excellence. It is one of the very few companies in India with diverse offerings ranging from coal, natural gas, solar and wind power, ports, airports, digital services including data centres, edible oil, and agricultural products.

Energy ventures: Powering the world

One of the most significant impacts the Adani Group has made is in the energy sector. Adani’s acquisition of critical assets, such as coal mines in Australia, strengthened its footprint in the global energy market. These recent acquisitions line up with growing international initiatives in the move towards cleaner and more sustainable energy.

Ports and logistics: Connecting continents

Adani’s global expansion goes beyond energy. It invested in port and logistics infrastructure which bridges the gap between nations. Its acquisition of major port terminals Down Under, as well as extension works in India and around the world, have fortified its position in this pivotal area.

Airports: Elevating the travel experience

The Adani Group’s foray into airport operations is noteworthy. It has won rights for India’s airport infrastructure, starting with Mumbai and Ahmedabad airports.

Innovation and sustainability: Paving the way

Adani’s overseas operations are in line with the Group’s emphasis on innovation and sustainability. The development of solar and wind energy projects, as well as investments in data centres for the digital era, form a significant part of the Adani portfolio. The efforts reflect the company’s commitment in line with global sustainability goals and place it among socially responsible corporations on the world stage.

Creating local impact: Employment and community development

Adani’s global expansion isn’t just about business; it’s about making a positive impact in the regions it operates in. Through its international ventures, the Group has created employment opportunities and invested in local communities. This approach resonates with its commitment to being a responsible corporate citizen, which has proved beneficial for millions of job seekers.

Challenges and triumphs: Navigating the global stage

From regulation challenges to sustainability issues, multiple obstacles came in the way of the Adani Group. Nonetheless, its flexibility, ability to innovate and its capacity for collaboration with local operators enabled it to face challenges and come out victorious.

The future of Adani’s global odyssey

Adani’s global expansion shows no signs of slowing down. The Group continues to explore new opportunities, innovate, and contribute to sustainable development on a worldwide scale. With a steadfast commitment to its core values and a vision for a brighter future, Adani is poised to make even more significant strides in the global arena.

A vision for a global impact

Amongst the vast web of transnational commercial endeavours, Adani’s growth is quite extraordinary. Right from its origin, the Adani Group has been expanding to numerous industries globally with a long-lasting effect. Its mission for innovation, sustainability and community development sets a shining example for businesses worldwide. Tracking Adani’s rise globally, we see growth as well as its commitment to creating a better world. In the years to come, Adani’s influence on the global stage is sure to shine even brighter, guiding the way towards a more interconnected and sustainable future. In a world with boundless opportunities, Adani’s journey continues as a beacon of progress, leaving a positive impact on the economy, society and nation as a whole.