Book Extract: The story of the Cosy Twosome

Title The Gujaratis: A Portrait of a Community
Author Salil Tripathi
Publisher Aleph Pages 744 Price Rs 1,499

Gautam Adani had dropped out of college and begun trading diamonds as a young man. He then moved to Ahmedabad where he traded polyvinyl chloride at his cousin’s firm. In 1988, he branched out on his own, to trade commodities.

In a story which remains shrouded in mystery, he was abducted in 1998 by gangsters and later released; neither he, nor anyone else has provided much information about why he was kidnapped and what led to his release, although reports suggest a significant amount of ransom was paid. Adani did not even turn up at the trials of his abductors despite repeated summons, and the court acquitted them.

More dramatically, on the night of 26 November 2008, he was at the Taj Mahal Hotel in Bombay when Pakistan-backed terrorists attacked the hotel and its guests, shooting recklessly and tossing explosives. The horrifying drama lasted nearly three days, with round the clock television coverage, and some 166 people died in the attacks at two five-star hotels, the city’s main railway station, and a Jewish home.

Adani was with nearly a hundred guests in a hall, with some hiding under sofas and others praying for their lives. Adani told other guests to have faith in god. The following morning, he was among some of the hostages taken out through a rear entrance and reached home in Ahmedabad, flying on his private jet. He does not like dwelling on those incidents.

Adani’s meteoric rise has coincided with Modi’s. Throughout the period when Modi was shunned by the international community, Adani championed Gujarat and Modi’s leadership. From the time Modi was declared the [BJP’s] prime ministerial candidate till his election, Adani Enterprises’ share price rose from Rs 5 a share to Rs 786 a share.

By September 2003, Adani had pledged to invest Rs 15 billion in Gujarat. The same year, he was granted the permission to develop a special economic zone (SEZ) in Mundra in Kachchh. Fishing communities in Kachchh have vigorously protested the port development in Mundra and a Tata coal power plant nearby.

The Mundra SEZ’s land area was 7,350 hectares. There were fragile, protected mangroves in the area, but environmental clearance was waived. Normal labour and tax laws do not apply at SEZs, which made it an attractive location for investors. The CAG, whose job it is to examine government’s financial conduct, published a report in 2013 which held that part of that land transfer for the SEZ was not legal, but Gujarat government challenged the findings. The CAG also said that Gujarat was buying power from the Adani group at a price significantly higher than prevailing rates.

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Unlike the Ambani growth story, Adani’s rise is not fuelled by sales to mass consumers or through large public issues, but through debt. Adani borrows money, makes the borrowed finance work by building assets, and then leases out the infrastructure he has built.

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Unlike Reliance, where the petrochemicals business helps bankroll Ambani’s plans, and Tata Consultancy, which helps finance much of Tatas’ other expansions, Adani’s growth is debt-fuelled. [...] The Financial Times said in 2020 that the group’s outstanding debt exceeded $20 billion, and in the financial year 2022, it had risen 40 per cent to $26.83 billion.

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Adani sits at the centre of the Gujarat Model, which has been synonymous with Modi, where the government would offer land at a steeply concessional rate to a business group and provide other incentives. It would then finance development from the taxes earned from the economic activity generated. According to one investigative account, the Adani group paid between Rs 1 and Rs 32 per square metre to develop its port and special economic zone project, a rate considerably lower than what others paid. For comparison, Tata Motors was given 1,100 acres for its Nano car plant in Sanand at Rs 900 per square metre—and government auditors were concerned about that deal too. Other auto companies too paid similar rates, other infrastructure companies paid between Rs 470 and Rs 6,000 per square metre.

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The Adani export processing zone is across from the Reliance refinery in Jamnagar, with the Gulf of Kachchh in between, and about 66 kilometres from Kandla, the site of India’s first state-run export processing zone. While countries establish such zones to attract investment, economists are sceptical of their long-term utility, arguing that such zones lead to lopsided growth and development, and there is no good reason why such liberalised terms should not be offered to all investors anywhere in the country.

According to a detailed investigation in Forbes magazine, Adani acquired the land in Mundra at about $1 a square metre, which he sublet to other companies (including the state-owned Indian Oil) at $11 a square metre. The acquisition included over 1,000 hectares of grazing land, raising concerns about the impact on local farmers. Villagers with whom the Forbes journalist Megha Bahree spoke told her that they didn’t know that their village chiefs had signed away the land.

As India began voting in 2014, Indian newspapers were already naming Adani as ‘the baron to watch out for’ should Modi become the prime minister. The growth trajectories of Modi and Adani were not coincidental. From a closing price of Rs 1.22 a share in July 2002, the price of Adani Enterprises had risen to Rs 69.75 in May 2014, a rise of over 5,700 per cent.

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While many Indian industrialists attended some of the ceremonies at Adani’s son’s wedding in Goa, one guest spent two full days at the wedding, like ‘a genial uncle’, and that was Modi. Their friendship deepened during Modi’s time as chief minister. Modi frequently travelled on Adani’s corporate jet across the state, and later, within the country. In May 2014, when Modi flew to Delhi to be sworn in as prime minister, he flew in Adani’s plane. Since his prime ministership, Adani has also joined him on several overseas trips. Adani’s infrastructure investments are massive. According to the Forbes list of the world’s billionaires, in May 2021, Adani ranked twenty-fourth, with a net worth estimated at $59 billion. By late 2022, he had briefly overtaken Amazon founder Jeff Bezos as the world’s second wealthiest person. His rank fell steeply in early 2023, after the meltdown of his stock price following the critical Hindenburg report.

The $25 billion group has interests in coal, infrastructure projects, commodities, media, telecom and real estate. Its turnover represents 0.7 per cent of India’s gross domestic product, and its profit in 2022 was $1.8 billion. In 2018, when India awarded 126 contracts for operating piped natural gas networks, the Adani group secured twenty-five bids.

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Its other interests include agriculture (cold storage, grain silos and food products), public transport infrastructure, and consumer finance. The group is building an expressway connecting India’s political and commercial capitals, Delhi and Mumbai.

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By early 2019, Adani controlled a quarter of India’s port capacity (including Mundra) and had won the rights to manage all six airports India had tendered (and later added two more, including a three- quarters share in Mumbai, India’s second- busiest airport).

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Besides its ports in India, Adani runs ports in Australia, Sri Lanka, and since early 2023, Israel. Adani warehouses stock 30 per cent of India’s grain, operate a fifth of India’s power transmission lines, its airports handle one quarter of commercial air traffic, and Adani companies produce a fifth of India’s cement. When Adani bids for a project in India, other bidders sometimes withdraw, even if they are experienced and have a track record. In some sectors, the government has amended rules to permit Adani to bid, even if he does not qualify.