Friday, September 24, 2021

With A Surging Net-Worth, Why Gautam Adani Could Soon Eclipse Mukesh Ambani As India’s Richest Person?

Gautam Adani, founder-chairman of Adani Group, climbed to the 14th spot on the Bloomberg Billionaire’s Index and emerged as India’s second-richest person fuelling speculations that he could soon surpass India’s richest man, Mukesh Ambani.

With a net worth of $67.6 billion, Adani is now Asia’s second-richest person, after Reliance Industries chairman Mukesh Ambani, who is ranked 13th on the Bloomberg Billionaire’s Index released on May 20.

Adani overtook China’s Zhong Shanshan, who is now pushed to the 15th spot with a net worth of $65.6 billion. The list is headed by the founder and CEO of e-commerce giant Amazon, Jeff Bezos, who has a net worth of $189 billion, followed by Tesla’s Elon Musk.

This development followed the massive upsurge in the stocks of the Adani Group earlier this week, when Adani Green announced the acquisition of SB Energy India for $3.5 billion, marking the largest acquisition in the renewable energy sector in the country.

Adani Group operates in multiple sectors including port, airport, energy, resources, logistics, packaged foods, agri-business, real estate, financial services, and defense.

Adani vs Ambani

Since last year, Adani Group has registered massive growth, and with a difference of $10 billion between Adani and Mukesh Ambani, there had been speculations of the former racing ahead soon. This is also based on the upsurge and growth of Adani Group.

Since May 2020, Adani has reported an increase of $33 billion in his wealth. In the same period, the assets of Mukesh Ambani have seen a downward spiral of $175 million.

The market cap of Adani Group has jumped to $115 billion from $20 billion in May last year, marking an increase of over six times. In the same period, the market cap of Reliance Group has increased to $178 billion from $125 billion.

In the past year, the shares of Adani Total Gas have increased 114 times in the stock market. The stocks of Adani Enterprises have shot up 82 times, while that of Adani Transmission has risen 61 times.

In the year 2020, while the Covid-19 pandemic induced lockdowns inflicted a heavy blow to the small businesses around India, it made India’s rich even richer. In 2020, coinciding with the huge losses to jobs and business, India, added 40 new billionaires.

Even then, Adani had outperformed his rival Mukesh Ambani. According to the data released by the Bloomberg Billionaires Index, Adani’s wealth, during the first 10.5 months of 2020, grew by $19.1 billion as compared to the $16.4-billion surge recorded by Ambani.

Gautam Adani – A Humble Begining 

A school dropout, Gautam Adani had a short stint at Mumbai’s diamond industry. He then returned to Gujarat and helped his brother in his plastics business.

In 1988, he established Adani Enterprises Ltd and in 1995, the Adani Group began operation from the Arabian Sea port of Mundra in Gujarat. His tenacity to scout out relatively new industries, which put them in face of the least competition, has been attributed as a major factor for the success.

Reaping the benefits of the business-friendly environment in Gujarat during the tenure of Narendra Modi as chief minister, Adani built an industrial zone around the Mundra Port.

In the aftermath of the 2002 communal riots of Gujarat, Adani was instrumental in setting up a new industry body purportedly to sideline the Confederation of Indian Industry (CII), which had criticized the then CM over the riots. Later, the CII apologized to Modi.

Adani was also seen as the brains behind the biennial ‘Vibrant Gujarat’ summit and projected Modi as the pro-business leader.

The Turnaround 

The year 2014 is an important milestone in contemporary India’s political history because of the arrival Modi-led Bharatiya Janata Party government. The same year the Adani Group started diversification into various sectors.

The emphasis on privatization and the public-private partnership model boosted the presence of the Group in diverse arenas, from renewable energy to defense, ports, and airports.

In the defense sector, the Adani Group began partnerships with defense contractors to aid the government’s push towards local manufacturing of military equipment. The Group later put its stake on gas, becoming the country’s largest retailer of fuel in the private sector.

In 2019, the government privatized the airports in Ahmedabad, Lucknow, Jaipur, Mangalore, Thiruvananthapuram and Guwahati. In August 2020, the federal government approved the proposal for leasing out the airports to Adani Enterprises.

Emerging victorious from a global bidding process, the Group acquired the rights to operate, maintain and develop these airports on a public-private partnership basis for 50 years.

Adani Ports manages 11 ports and terminals on India’s west and east coasts. In March 2021, it stretched its footprints abroad.

The Sri Lankan government offered its West Container Terminal (WCT) to the Adani Group to execute the project with the Sri Lanka Ports Authority. Holding 51 percent in terminal partnership, Adani ports became the first-ever Indian port operator in Sri Lanka.

Adani – Brush With Controversies

The meteoric rise of Gautam Adani is dotted with many controversies in India and abroad. While opposition parties have often criticized the increasing footprints of the Group in the country’s major sectors like aviation and ports, it has found itself in many global controversies as well.

Last month, Australian media outlet ABC News published a sensational report alleging that India’s Adani Group was paying up to $52 million to one of Myanmar’s junta-controlled companies that is facing US sanctions over human rights violations.

The story was based on leaked documents even as the Adani Group had denied after February 1 military coup that it had engaged with military leaders over the 2019 approval of its $290 million port, according to The Irrawaddy.

In 2010, the Group had announced its plans to set up the Carmichael mine, proposing to build it in the vast coal reserves of Galilee Basin, Queensland, Australia. The infrastructure included an airfield to transport workers, and a rail line to connect the mine to Adani’s Abbot Point Coal Terminal.

The group had proposed an annual production of 60 million tons of coal, which according to green activists, could pose a threat to the survival of the Great Barrier Reef. This had resulted in huge protests by many environmental and civil society groups.

After a decade-long legal battle with regulators and environmental activists, the Adani Group finally got approval for the project in 2019.

Analysis By Anupama Ghosh, Ph.D

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