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    How Big is the Adani Group? What Do the Adani Group Companies Do?

    Editor, TRANSFIN.
    Mar 7, 2021 3:53 PM 4 min read

    How big and entrenched is the Adani Group?

    Well...even by the oligopolistic tendencies of India’s select family-backed conglomerates, Adani is setting new standards…

    The Ahmedabad-headquartered multinational corporation has become almost omnipresent within India’s infrastructure value chain.

    From logistics, airports, roads and railways to energy, mining, defence and aerospace, Adani boasts a very diverse business portfolio, also including real estate, agri, financial services and now even data centers.

    How Big is the Adani Group? What Do the Adani Group Companies Do?

    With operations spread across 70 locations in 50 countries, the Adani Group companies generate an annual revenue of roughly $15bn. Among its six listed entities, no less than three have a market cap above ₹1trn ($13.7bn) - Adani Green Energy, Adani Ports and SEZ, and Adani Enterprises (which joined this elite club only yesterday).

    Which are the Adani Group Companies?

    The Group began as a commodity trading enterprise in 1988 before expanding its interests across sectors and geographies. 

    How Big is the Adani Group? What Do the Adani Group Companies Do?

     

    Adani Enterprises

    Initially, all Group companies were subsidiaries of Adani Enterprises, which is also a listed entity.

    The Group’s expanding airport operations are incubated within Adani Enterprises. Through the Airports Authority of India’s global tendering process, Adani Airports won the mandate to operate the airports at Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram - for 50 years. (In 2018, the Government approved the privatisation of these six airports, all of which were won by Adani.) It will soon also take over Mumbai International Airport and the upcoming Navi Mumbai Airport (acquisitions that involved a tense standoff with the GVK Group).

    Also woven into Adani Enterprise’s operations are the conglomerate’s mining and coal management businesses. Adani Mining is in charge of the globally (in)famous Carmichael coal mine project in Australia, which has elicited widespread controversy over its claimed economic benefits and environmental implications. 

     

    The Other Adanis

    Since 2007, corporate restructuring has given rise to five more listed entities, which were demerged from the flagship Adani Enterprises and listed on the bourses in their own right.

    Adani Ports and Special Economic Zone controls the Group’s bellwether maritime ports. With 10 ports in six states, it is the largest commercial ports operator and accounts for nearly one-fourth of the cargo movement in the country. Its most notable port is the one at Mundra, Gujarat, which is India's largest private commercial port and hosts the world's largest coal import terminal.

    Adani Power is the conglomerate’s power business subsidiary and the country’s largest private thermal power producer. Business in the transmission sector is taken care of by Adani Transmission, which has also forayed into the distribution space with the acquisition of Reliance Infrastructure’s power unit in Mumbai. Adani Electricity, which is a 100% subsidiary of Adani Transmission, is known for providing electricity to over 3 million customers in Mumbai and Thane district with a distribution network spanning over 400 sq km.

    All in all, the conglomerate currently operates more than 8,500 circuit kms of transmission lines and has around 14000 MVA of power transformation capacity. It aims to set up 20,000 circuit kms of transmission lines by 2022.

    One of the largest renewable companies in India, Adani Green Energy has a current project portfolio of 13,990 MW, which includes solar and wind assets. The electricity generated is supplied to Central and State Government entities and Government-backed corporations. The company operates Tamil Nadu’s Kamuthi Solar Power Project, one of the world’s largest solar parks. It aims to scale up its infrastructure to produce 18GW by 2025 and 25GW by 2030. (Fun fact: Adani Green Energy was the first Indian company to offer investment-grade green bonds.)

    Finally, Adani Gas. Technically, its name is now Adani Total Gas Ltd to reflect its status as "a joint venture company” of Adani Group and France’s Total Group, with 37.4% stake by each promoter and remaining 25.2% with public shareholders. This listed subsidiary is involved in city gas distribution networks in Ahmedabad, Vadodara, Faridabad and Khurja, with expansion into more cities in the offing.

     

    A Debtly Game

    The Adani Group also has a notoriously opaque and meandering corporate structure, with many inter-linkages that enable money raised for growth to circulate within the Group through a high-density of “related party transactions”. This arrangement is not unlike the cross-holdings between the Tata Group of companies. This can be a move to increase management control. But such a practice can also stifle flexibility and create a situation where one troubled entity ends up affecting all the others in the domino chain.

    As for the aforementioned money raised for growth, the conglomerate amassed increasing amounts of debt since the 1990s to fund its rapid expansion.

    As of November 11th 2020, its total outstanding debt was over $30bn, including $7.8bn worth of bonds and $22.3bn in loans. Now, high debt is not a shocking prospect for big businesses, but Adani can’t really boast of a reliable cash cow unlike its big peers such as RIL and Tata Sons (which can bank on Reliance O2C and TCS respectively).

    That said, debt may not sour Adani’s books...yet. The Group has continued to raise impressive funds via bond sales and overseas lenders. Part of the reason behind Adani’s lure is the perception that Chairman Gautam Adani has Prime Minister Narendra Modi’s ear.

    As Australian energy analyst Tim Buckley once mused:

    He is Modi’s Rockefeller.

    FIN.

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