He’s emerged from controversies, including a Sebi probe, been kidnapped and released by gangsters with possible links to Dawood Ibrahim, and he has now managed to force his way into the league of India’s top 10 richest people, and into the top 100 in Forbes magazine’s annual billionaires list. Gautam S. Adani, 45, began as a trader and now heads a diversified company with mega property, port, shipping and power projects. The chairman of Adani Enterprises Ltd, which has invested Rs7,000 crore in infrastructure projects, reveals his plan to spend Rs50,000 crore more over the next five years in energy and infrastructure. Edited excerpts:
Where is this investment going to happen? How do you propose to spend Rs50,000 crore?
The focus for investment in the future would be primarily on energy, oil and gas and the infrastructure sector. The money would be spread across these three sectors with power taking a sizeable chunk.
When do you plan to have an initial public offering (IPO) for your power business? How much do you propose to raise?
It is too early to speculate on an IPO for our power business. At this stage, we are setting up about 10,000MW of power generation capacity. We are already implementing around 6,600MW generation capacity—4,620MW at Mundra (in Gujarat) and 1,980MW at Tiroda (in Maharashtra) through internal fund generation, debt, and private placement of equity with London-based 3i Group Plc. We also propose to put up 1,320MW in Rajasthan and 2,000MW at Dahej. All these would be based on coal—both Indian and imported.
Inviting public participation is certainly one of the options available to us. We will assess our need and tap the market as and when we feel the need.
Is there a need for another power project at Mundra in Kutch (Gujarat) when the Tata group’s ultra mega power project is coming up and Gujarat Mineral Development Corp. already has a project there?
Power for all by 2012 is the government’s vision. This, coupled with the growth of the economy, will make the power sector a supply-driven economy at least for the next two decades.
Powering ahead: Adani says power generation for his company is not restricted to a particular state, but is an all-India business.
The key concern when planning for electricity is the cost of generation. In this, Kutch has inherent advantages—availability of lignite and deep draft (depth) at Mundra, which allows large coal carriers to dock at the port there. These are also the reasons that we are looking at while setting up generation facilities at Mundra. We have set a target to generate 10,000MW power by 2012-13.
Power generation for us is not restricted to a particular state but is an all-India business. To cater to the all-India market we are also putting up a transmission line of 400km from Mundra to Dehgam to get national transmission connectivity. Our business plan is to be fully integrated in all power verticals. We are, therefore, looking at distribution of power in our SEZ (special economic zone) at Mundra and Dholera.
The power projects at Kutch have also necessitated the need to set up the world’s largest import coal handling terminal to cater to the 8,620MW of power that would be generated at Mundra. This coal terminal will handle over 50mt of coal and ensure that we remain cost competitive.
Controversies have been part of your growth with the Securities and Exchange Board of India (Sebi) barring promoters of Adani from dealing in the stock markets for two years for their alleged involvement in a stock market scam involving trader Ketan Parekh. How are you handling the issue?
The matter related to the Ketan Parekh episode is sub-judice and Sebi’s observations have already been stayed (by the Securities Appellate Tribunal). The next hearing is in April. That is all I have to say on the matter.
There has been serious resistance in many states to SEZs. Why would investment flow into your SEZ?
In our business model, we are developing a multi-product SEZ on barren land with no social infrastructure whatsoever. To make the SEZ operational, we have to invest not only in barren land but also its development, including roads, port, airports, railways and social infrastructure. Wherever development takes place for the betterment of an area without displacing people or their produce, it is always welcome. As for the Mundra SEZ, we already have the advantage of an operating port, proposed power plant, air, rail and road connectivity, besides other infrastructure. Mundra is ideally located due to its proximity to West Asia and Europe.
How do you propose to restructure your business?
We are operating in five business verticals. In the energy vertical, coal mining, coal sourcing, power generation and power trading will be our core business segments.
The hydrocarbon business, comprising city gas distribution, oil and gas exploration, as well as our liquefied natural gas (LNG) terminal, is an upcoming vertical at Adani.
Our logistics vertical is dovetailed with the special economic zone at Mudra.
The company’s realty project with Shantigram—a commercial and residential township—will be followed by developing commercial properties in Mumbai, mini metros and tier II cities.
Agribusiness, the fifth vertical, focuses on handling, storage, distribution and trading of agro commodities. It will also focus on backward integration for improved farm productivity by providing high yielding and improved varieties of saplings to farmers and fruit growers.
We have also invested in the Adani Knowledge Centre, a nursery for growing managers. We plan to establish an institute of infrastructure management.
Which is the biggest challenge before the group?
The biggest challenge is in getting the right kind of people. I wish I could get good professionals. Entrepreneurial ideas are plenty but there are no people to implement them. Give me people and I would do projects, just like that. People today are the biggest challenge to achieving growth.
How involved is your family in the business? Do they participate in the growth of the company or is it primarily you and professionals at the helm?
The family members are not involved in the day-to-day operations. Our role is mainly to review the business and develop new vistas. While I concentrate on new growth areas, my younger brother Rajesh focuses on the energy businesses. My elder brother Vinodbhai looks after our global trading business from Dubai and Singapore. My nephew Pranav monitors the agro businesses and my wife Preeti steers the Adani Foundation. Both my elder brothers, Mahasukhbhai and Vasantbhai, are involved in our traditional family business of textiles.
I believe that for any organization, especially a family organization, to grow, the faster it starts relying on professional managers, the larger it can grow.