Can Adani Heat Up Under Modi’s New Indian Government?

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If you happen to be in India during these hot, sweaty days of summer, the one name you cannot escape seeing in the news every day is Adani. The brand is generating heat, not necessarily limited to its growth, investments or upward movement of shares but also due to the controversies surrounding it.

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For the uninitiated, the Adani Group, total revenue US $8.7 billion, is one of India’s fastest and most successful business growth stories in recent times. A three-brother business conglomerate headquartered in the Indian state of Gujarat known for another prominent Indian personality the province’s chief minister Narendra Modi, Adani’s phenomenal rise as a group of businesses is once again under public scrutiny, as it has been off and on, for many years.

And the reason for the insinuations, innuendos, jabs and the occasional public swipe against the Group is the perceived closeness of the Adani brothers, chiefly that of Group Chairman Gautam Adani, to Mr. Modi, the man who almost everyone in India expects to be named the next Indian Prime Minister by the end of the week. The wind beneath the sail of such allegations is – there just ain’t no way any business grows so fast in India unless, of course, there happens to be a “political hand” backing it.

Earlier this week, tucked away in between reports of allegations and counter-allegations was the story that the Adani Group had finally received approval for a massive $15.5 billion coal and rail project in Australia’s Queensland. The mine is expected to produce 60 million tons per annum (mtpa) of thermal coal used in power stations, and includes a 189-kilometer rail line northwest of Clermont.

Adani is investing in Australia to augment India’s energy resources, explained Gautam Adani in a recent interview with the Business Standard. India, despite having the world’s third-largest reserves of coal, is lagging in actual mining because of simple red tape, and as reported by yours truly here at MetalMiner just last week, Indian companies are about to finalize deals with US and Indonesian mining companies for a steady supply of coal.

Within a span of about 25 years, the Adani Group has spread itself across important sectors as energy, agro, and logistics. It’s a big player in coal, ports, electric generation and transmission, oil and gas exploration, commodities trading, cooking oil, and many other businesses. Stay tuned for Part II of the Adani story tomorrow. Sohrab Darabshaw contributes an Indian perspective on industrial metals markets to MetalMiner.

 

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