Starting as a small-time commodity trading business, Adani Enterprises Ltd (AEL), the flagship of the Adani Group founded by Gautam Adani, went on to incubate half-a-dozen companies and grew through acquisitions. The scorching run of Adani companies led by AEL on the stock exchanges took the Group to the numero uno position in market capitalisation and made Gautam Adani the third richest man in the world before the Hindenburg Research report triggered a collapse in the share prices of Group companies.
Even as the Adani group termed the report “maliciously mischievous”, and even said that it was planning to sue Hindenburg, shares of all nine listed group companies came under pressure. Over the last seven trading sessions, they have lost an aggregate of Rs 9.1 lakh crore in market capitalisation — 47.4 per cent of their market cap. The group market cap fell from Rs 19.18 lakh crore on January 24 to Rs 10.07 lakh crore on February 3.
Decline in fortune of Adani Group firms
The flagship Adani Enterprises came under huge selling pressure on Wednesday and Thursday. Over the last seven trading sessions, its stock has fallen by 54 per cent.
The group had to call off AEL’s FPO a day after it managed to get full subscription to the issue, following interest from non-institutional investors and family offices of large corporations. The shares were called off after they plunged by over 25 per cent on Wednesday. Gautam Adani said that he would refund the investors’ money, and that the decision was taken to safeguard the interest of investors.
The decline in share prices of the Adani group has led to significant erosion in the net worth of Gautam Adani, who slipped from 3rd spot to 17th spot on the index of global billionaires February 3, with a net worth of $61.7 billion.
AEL growth trajectory
Gautam Adani, then 26 and a school dropout who had done short stints as a diamond sorter and managing a small plastic unit, established AEL as a partnership firm in 1988. It was registered and incorporated in Ahmedabad as Adani Exports Ltd on March 2, 1993; the name was subsequently changed to Adani Enterprises Ltd to reflect changes in its business strategies. A fresh certificate of incorporation was issued by the Registrar of Companies on August 10, 2006.
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The company acquired coal mines in India, Indonesia, and Australia, and became the country’s largest private coal importer. The power unit it promoted became the largest private power producer. AEL also entered the ports and airport sectors, and acquired Ambuja Cements and ACC in May 2022.
Companies incubated
AEL claims to have incubated six “decacorn businesses” and successfully listed them, including by way of demergers: Adani Ports and Special Economic Zone Ltd, Adani Power Ltd, Adani Transmission Ltd, Adani Green Energy Ltd, Adani Total Gas Ltd, and Adani Wilmar Ltd.
Current activities
The company is now setting up a green hydrogen ecosystem with the aim to incubate, build, and develop an end-to-end integrated ecosystem for the manufacture of green hydrogen.
According to AEL’s public issue prospectus, this includes manufacturing renewable energy equipment such as wind and solar modules to reduce the cost of renewable power, the production of renewable energy and green hydrogen itself, and transformation of a part of the green hydrogen produced into derivatives, including green nitrogenous fertilizers, ammonia and urea, both for the domestic market and exports.
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The company operates and manages seven airports — in Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati, and Thiruvananthapuram — and is developing a greenfield airport in Navi Mumbai. As of September 30, 2022, it had 14 road assets, of which three have started commercial operations.
AEL offers mining services including contract mining, development, production-related and other services, as well as integrated resource management services of coal, which involves accessing coal from diverse global pockets and providing just-in-time delivery to Indian customers. It also recently acquired mines to conduct commercial mining activities.
It also manufactures, markets, and brands food FMCG products, and is developing a super-app, “Adani One”, to complement the group’s consumer serving businesses.
According to the prospectus, the company intends to manufacture petrochemicals, copper and similar metals, and strategic military and defence products that enhance India’s self-reliance.
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The AEL board
While Gautam Adani is the chairman of the board, his younger brother Rajesh Adani is managing director. Pranav Adani, son of Gautam’s elder brother Vinod Adani, is also on the board.
Other members include M Narendra, former chairman and MD of Indian Overseas Bank; V Subramanian, a former Secretary in the Ministry of New and Renewable Energy; H Nerurkar, a former MD of Tata Steel; Omkar Goswami, founder of CERG Advisory and a former consultant to the World Bank, IMF, ADB, and OECD; Vinay Prakash, CEO of Adani Natural Resources; and Vijaylaxmi Joshi, a former Secretary in the Ministry of Panchayati Raj.
Gautam Adani has two sons — Karan is the CEO of Adani Ports, and Jeet is Vice President (Group Finance).
AEL’s performance
AEL earned revenues of Rs 26,824 crore, and made a net profit of Rs 720.70 crore during fiscal 2022, according to the BSE website. During the second quarter ended September 2022, it reported a revenue of Rs 22,136 crore, and a net profit of Rs 469 crore.
Decline in fortune of Adani Group firms