Billionaire Adani prospers as Modi stresses development
Apr 10 2014 , Ahmedabad
Adani's rapid ascent to the top tier of Indian business is often associated with the rise of Narendra Modi, the Hindu nationalist opposition leader widely expected to become India's next prime minister once the country's election ends next month.
Critics dislike Modi's authoritarian tendencies and attitude towards religious minorities, most notably Muslims, while big business admires the chief minister of Gujarat's ability to get things done.
Based in the western state, Adani's empire has benefitted from Modi's emphasis on economic development, but the tycoon bristles at the notion that he has been granted undue favours.
"Crony capitalism should not be there. I definitely agree with that. But how you define crony capitalism is another issue," Adani, 52, said in a recent interview in his office in Ahmedabad, Gujarat's commercial capital.
"If you are, basically, working closely with the government, that doesn't mean it's crony capitalism," said Adani, whose companies have built a chunk of the infrastructure that has helped make Gujarat an industrial powerhouse.
Shares in Adani firms have surged on what traders say are bets the group would perform well under a Modi-led government.
Its flagship Adani Enterprises soared 22.9 percent for its biggest daily gain on Thursday and has nearly doubled since the start of February, compared with a nearly 20 percent gain in the infrastructure index.
Cosy ties between business and politics are a key issue in Indian elections that began on Monday after a spate of scandals weakened the Congress party government, paralysed decision-making and stifled investment.
Popular anger over corruption fuelled the rise of the Aam Aadmi (Common Man) Party, which rails against what it says is rampant crony capitalism in India.
With speedy bureaucracy and 24-hour power in a country notorious for red tape and blackouts, Gujarat is a magnet for investment as well as criticism that the playing field is tilted too much in favour of industrialists like Adani.
"These improvements in infrastructure and governance are mainly for the corporate sector," said Indira Hirway, director of the Center for Development Alternatives in Ahmedabad.
"For other sectors, for the masses, and particularly for the poor, the infrastructure is not doing that well," she said, referring to issues such as drinking water, sanitation, and social infrastructure.
A college dropout and self-made entrepreneur in a country where industrial wealth is often inherited, Adani has built a power, mining and ports giant with $8.7 billion in revenue.
Adani has stepped up its operations outside Gujarat in recent years with hefty investments in Australia and elsewhere in India, but it is the vast port and special economic zone at Mundra, a once-remote coastal town on the Gulf of Kutch in Gujarat, that is Adani's crown jewel and where opponents say the government favoured it with cheap land.
Borrowing heavily, Adani sank billions of dollars into an area with large swathes of marshy wasteland, making it the first Indian commercial port to claim 100 million tonnes in annual cargo handled. In Mundra, Adani also built India's largest privately-owned power plant, producing 4,620 MW of power, and a 64-kilometre railway connecting the port to India's dilapidated network.
During a visit, the scale and variety of operations was clear: trucks carrying giant logs headed out, while huge heaps of imported coal awaited shipment to power plants and rows of Maruti Suzuki (MRTI.NS) cars were parked on a lot for export.
The state government, Adani said, has been a facilitator.
"You can say very well that land has been given to Adani," said Adani, wearing a white short-sleeved shirt over dark trousers and black loafers. "So what? Has Adani taken away land and not developed anything?"
MODI AND ME?
As chief minister since 2001, Modi has aggressively courted investment and capitalised on Gujarat's robust economy to put his Bharatiya Janata Party (BJP) in a winning position for the election that started Monday and ends next month.
"He is convinced that he needs industrialists," Adani said of Modi's stance on development.
However, the BJP is unlikely to score an outright majority, and will probably need coalition support to form a government, which could check Modi's ability to implement policies.
The BJP's pro-business stance contrasts with Congress' socially-driven model of subsidies for poor and rural voters.
Adani - worth $2.65 billion as of last October according to Forbes and the richest businessman based in Gujarat - did not directly answer when asked several times in an hour-long interview if he is friends with Modi.
"What does it mean - personal friends?," he said, adding that he has friends across the political spectrum, but avoids politics.
When it was pointed out that Modi flies on Adani corporate airplanes, Adani said Modi "pays fully" and has been a regular charter flight customer for roughly five years.
In a country where businesses tend to spread their political donations pragmatically among parties, companies listing an Adani House address gave roughly $721,000 to the BJP and about $417,000 to Congress between April 2004 and March 2012, according to an analysis by National Election Watch and the Association for Democratic Reforms.
By comparison, another Gujarat company unrelated to Adani, Torrent Power Ltd, gave $2.17 million to the BJP and nearly as much to Congress.
Most political funding in India is undeclared.
Asked about political contributions, Adani said, "sometimes we make ... but this time we have basically stayed away."
Still, Adani is a prominent figure at the biennial "Vibrant Gujarat" summit organised by Modi, where members of India's corporate elite, like Ratan Tata and the Ambani brothers, gather to announce big investments and extol the virtues of Modi and his state.
Admirers of the Gujarat model applaud the speed and predictability of obtaining permits and clearances, and hope that if elected Modi can do the same at a national level.
Critics say it favours big industry at the expense of smaller enterprises and broader social development.
In a lawsuit brought by villagers, the Gujarat High Court early this year ordered the shutdown of 12 industrial operations in Adani's Mundra special economic zone for failure to obtain environmental clearances. The Supreme Court allowed operations to continue but not expand, and ordered the federal environmental ministry to decide on permits.
The company says it did not violate any rules.