Loved this podcast with senior journalist and educator RN Bhaskar, wherein he covers the journey of Gautam Adani & the Adani Group in detail, including how he made various decisions as he grew the conglomerate.

Some interesting insights:

#1 Gautam Adani started off as a diamond trader. His original DNA was pure trading – figuring out how quickly and at what price can he sell a commodity for.

#2 As opposed to most other Indian groups, Adani has always preferred doing 50-50 equal joint ventures with partners across sectors (edible oil, gas distribution, solar, data management etc.). Drives the right accountability across both sides.

#3 Started the Mundra port as a JV with the Gujarat Govt (74:26), but then seeing the long-term potential of Indian logistics, bought back the 26% stake from the Govt. at a 26x markup to the original price. Thus, ended up as a 100% owner of India’s largest private port and also the most profitable.

#4 While most ports take several years to turn profitable, Adani’s ports have been immediately profitable, mainly because he has focused on building initial capacity only for commodities he understands deeply and trades in.

#5 Many years back, Adani was looking to lease port dredgers from the Indian govt. but it had a 3-month wait. To save time, he started buying second-hand dredgers, using them for 3 months in a year, and then leasing them out to other customers for the remainder. Today, Adani has 100+ dredgers and has one of the largest dredging businesses in the world.

#6 Adani smartly used cash flows from the highly profitable trading and port businesses to buy a coal mine in Indonesia, then eventually diversified into power and LNG terminals to become a diversified infrastructure conglomerate.

#7 Here are some core operating mantras of Gautam Adani:

• The market isn’t in your control. Cost is in your control. Watch your costs and keep them lower than the competition. Adani is ruthless in cost-cutting.
• Build long-term relationships and don’t compromise on them.
• If you make a mistake, cut your losses early. Adani started a partnership to enter the Aluminium industry in the 90s and realized very early that this company wouldn’t be a no 1 or 2 player in the space. He immediately shut the initiative down.
• For every risk he takes, he always has a risk mitigation strategy in his back pocket.

#8 One of Adani’s core financial strategies has been to create “land banks” around his ports (Ray Croc anyone?). Eg. back in 2007 itself, Mundra Port had ~35,000 acres of land.

The benefits of having a land bank as part of the port include:

(a) The land itself keeps going up in value.

(b) Captive warehousing, which leads to rental cash flows.

(c) Can be leased to other internal or external businesses that need proximity to the port. Eg. Maruti has created its full export hub at Mundra. The Port also has a 2.5 km airstrip for aircraft maintenance as well as for serving defense businesses.

#9 Adani is sitting on assets with massive future potential, especially given where India’s economy is headed. For example:

(a) Adani is the largest port player in India and also one of the largest globally.

(b) Adani owns the world’s largest coal mine in Australia. Even in this era of energy transition, given India’s power sector is still predominantly thermal, he has a steady opportunity to supply coal at least for the next 25 years.

(c) Owner of multiple major airports in India.

(d) Distributes ~32% of natural gas in India.

I believe there is a lot of first-principles business thinking that even tech founders can learn from Gautam Adani, especially around identifying & aligning with long-term secular growth waves, stitching together assets to create a competitive advantage as you surf these waves, and controlling your cost structure to ensure survival during the inevitable market downcycles.

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