Who Is Gautam Adani?

Gautam Adani is an Indian billionaire who made his fortune building Adani Group, a multinational industrial conglomerate. Adani went from being a school dropout and polisher of diamonds to a key driver of his country’s economic growth and one of the richest people in the world.

However, he has also made the news for less favorable reasons, with some questioning both his close ties to Indian Prime Minister Narendra Modi and the way he runs his companies. In early 2023, the conglomerate lost about $50 billion in market value after being accused of stock manipulation and fraud by a U.S. short seller.

Early Life

Gautam Adani was born on June 24, 1962, in Ahmedabad, Gujarat, India. His parents worked in the textile industry, running their own business, and had eight children.

As a child, Gautam had little interest in academics. He left school when he was just 16, then later went to Gujarat University to earn a degree in commerce, but dropped out in the second year. The young Gautam was said to be interested in business but not eager to join his father in textiles.

Early Career

Armed with an entrepreneurial spirit, determination to blaze his own trial, and a small handful of rupees, Adani headed for the big city of Mumbai. There he worked in the diamond-sorting trade, where he put in long hours polishing gems.

A key turning point came during the 1980s, when Gautam was asked by his elder brother to help run a plastic factory he had recently purchased in Ahmedabad. Back in his hometown, Gautam began importing key raw materials for manufacturing plastic, building up a list of international contacts, and getting a taste for life as a global trader of commodities.

Not long after, in 1988, he established his own business.

Adani Group

In 1988, Adani founded a polymers import-export business called Adani Exports Ltd. Thanks to a series of economic liberalization measures introduced in India around that time, the trading company was able to expand quickly and soon began dealing in several other commodities, including metals, agricultural items, and power.

The next big turning point came in 1995, when the company got into the port sector, the crown jewel of Adani’s business empire. With the right infrastructure in place, Adani’s company grew exponentially.

Today, Adani Group is an industrial conglomerate consisting of seven publicly traded companies. As owner, Adani has pretty much every angle covered. His sprawling empire focuses on everything from airports, train lines, and ports to data centers, green energy, coal mining, cement, the media, and essentially whatever India’s current prime minister deems crucial to meeting the nation’s long-term economic goals.

Adani’s strategy largely has centered on giving the Indian government what it needs to develop its rapidly growing economy, whether bringing more reliable electricity to its citizens, building expressways, or upgrading data centers. And that game plan has worked out rather nicely. Over the past few years, the share prices of his companies have rocketed, turning Adani into one of the richest people on the planet.

Controversies

Adani’s rapid ascent hasn’t been entirely free of scrutiny, however. Over the years, the tycoon has been hit with some fairly damaging accusations.

Hindenburg Research’s Allegations

In January 2023, Hindenburg Research, a U.S.-based short seller that made its name betting against cryptocurrency companies and unprofitable electric vehicle makers, accused Adani of “pulling the largest con in corporate history” after discovering that the conglomerate allegedly had engaged in “a brazen stock manipulation and accounting fraud scheme over the course of decades.”

Following a two-year investigation, Hindenburg Research came to the following conclusions about Adani Group:

• Vastly overvalued: Some Adani companies are priced like “the frothiest of high-growth tech companies” when they should be valued as relatively low-growth infrastructure operations.
• Riddled with so much debt that it could go bust: Five of Adani’s listed companies, according to Hindenburg Research, have current ratios below 1.0, suggesting “heightened short-term liquidity risk.”
• Money laundering: A relative of Adani’s allegedly used offshore entities to launder money through Adani private companies onto the listed companies’ balance sheets to maintain the appearance of financial solvency.

These are just some of the reasons why Hindenburg Research opted to short Adani stock. In the research note, published on Jan. 24, 2023, numerous other, more damaging accusations are made against the company’s founder and his running of the business.

Throughout the document, Adani and his family are labeled corrupt, routine scammers; thieves of taxpayer funds; forgers of documents; and basically flouters of many of the rules in place to ensure that businesses behave in the best interest of investors and the wider public.

Separately, on Feb. 1, 2023, group company Adani Enterprises Ltd. decided to cancel a fully subscribed share offering valued at $2.5 billion that it had just closed, and it returned the proceeds to investors. Adani, as chairman of the unit, attributed the move to “current market volatility” and said in a press release that after recent significant fluctuation in Adani stock, “the Company’s board felt that going ahead with the issue would not be morally correct.”

Investors quickly dashed for the exit after Hindenburg Research’s report came out, despite Adani Group pleading its innocence and dismissing what it said was “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”

By Jan. 30, 2023, Adani’s seven listed companies had collectively shed $65 billion in market capitalization. The next day, one week after the allegations were made, Adani slipped off Bloomberg’s list of the 10 wealthiest people on the planet, having reportedly lost $34 billion of personal wealth in just three trading days.

‘Deeply Overleveraged’

Hindenburg Research wasn’t the first to question Adani Group’s financials. Its lofty price-to-earnings (P/E) ratios have attracted the interest of plenty of skeptical analysts before, as has the health of the group’s balance sheet.

A big point of contention is the huge borrowing binge that accompanied the rapid expansion of Adani’s empire. In August 2022, CreditSights, a research firm owned by Fitch Group, shone a light on this, warning that Adani Group is “deeply overleveraged.”

Close Ties to Prime Minister

Adani’s close ties to Indian Prime Minister Modi, who happens to hail from the same part of the country as the corporate mogul, are the subject of much scrutiny. Critics say Adani Group, which makes a lot of its money from government contracts, is given special, preferential treatment, leading to allegations of cronyism.

Personal Life

Adani is married to Priti Adani, an educationalist, dentist, and the chairman of the Adani Foundation, Adani Group’s philanthropy vehicle. Together they have two sons, Karan and Jeet Adani, both of whom also have executive roles at Adani Group.

Abduction 

In 1998, Adani said he was kidnapped at gunpoint and forced to pay out $2 million in ransom to be freed. In 2018, the suspected abductors were acquitted after the prosecution failed to establish the kidnapping and their roles in it, according to their attorney.

Mumbai Attacks

A decade later, Adani claimed to be dining at the Taj Mahal hotel in Mumbai when it was taken over by Pakistani militants as part of the 2008 Mumbai terrorist attacks. According to this account, Adani could see the militants entering the hotel and quickly ran to the basement and then a chamber hall, where he hid and eventually managed to escape unscathed.

The Bottom Line

Gautam Adani’s rise from being the son of a textile merchant and school dropout to one of the richest men in the world and the engine behind his country’s rapid economic growth is impressive, and it seemingly makes a good advertisement for the proverb that hard work pays off. But in early 2023, Adani’s reputation took a huge hit. Suddenly, the industrialist was painted as a fraud and con artist whose greed risks bringing the fifth-largest economy to its knees.

Now the world is waiting to see which of the two tales is true. Is Adani really the monster who Hindenburg Research and others have portrayed him to be, or a deserving self-made billionaire whose business acumen helped to modernize India?