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The second Richest man in the world .. Gautam Adani

 Gautam Adani is the second richest man in the world, right after Elon Musk. He used a specific business strategy to surpass Jeff Bezos in a short period of time. In the last five years, he climbed from the 10 richest men to the second richest man, surpassing Warren Buffet, Bill Gates, and most recently Jeff Bezos.

Before we get into the career life of Gautam Adani, He came from a simple, middle-class family in Gujarat. He is one of the 8 children of his parents. His father is a small-time textile merchant. He dropped out of college because he got bored with his studies. At the age of 16, he starts his first entrepreneurial journey only with 100 Rs .

In 1978, he moved to Mumbai to join the Mahindra Brothers Diamond Company, where he worked as a diamond sorter. In 3 years, he opened his own diamond brokerage firm. In the same year, his brother Mahasukhbahai Adani called and asked him to return to Gujarat to set up a plastic factory. This plastics business gave them access to international trade. Even to this day, out of all the companies, his most powerful company is Adani Enterprises Limited, where the main job is import and export. This is where the maximum revenue comes from. 

Let's have a look inside Adani's plastic manufacturing business. To create PVC pipes, you need PVC granules. And during that time, the only PVC granule supplier in India was IPCL Limited. IPCL could not supply all their requirements for Adani, so they started to import. Back in those days if anyone wanted to import plastic in bulk they would need a **letter of authorization," which was costly and time-consuming. Gautam Adani found a way to bypass that which not only saved him time but also earned him a lot of money.He made deals with State PSUs, Export Corporations, and GSEC to get this job done. Basically, he was placing his own order within their orders to the respective exporters. It's easy for them to get the letter of authorization because they used to order in much larger bulk than Adani. Adani would keep what's needed for manufacturing and sell the rest in the market. The government was happy because their companies were directly earning and benefiting from this trade. It's a win-win.

 Soon Adani import volume exploded from 100 metric tons to  40,000 metric tons in 4 years. They grew by 400  times. That's an average of 100 times per year. Now let's talk about the next biggest cash cows of Adani Group. Under the liberalization policy of India in 1991, The Mundra Port of Gujrat was privatized. Adani Group won the contract in 1995. This is where they started doing something that is about to take India to the next level. This is called begin-to-end business infrastructure. This means, starting from the manufacturing of the product until it reaches the customer,  Adani Group controls everything. 

This is a business strategy used by the legendary capitalist of America, Andrew Carnegie. Let's flip through the history pages and see what he did. In 1890,  Carnegie Steel had 80% of the US Market share. This is how he used to work. He acquired a couple of Coal and Iron Mines, then he set up some steel mills. Using the steel he was producing he began constructing railways lines and started owning railroads. 

Shortly after that, Carnegie started taking many transportation routes under his control. Finally, he began taking on projects for construction,  using the steel he was producing, and transporting them using the railroads he owned. Production of steel starts with coal and iron mine and ends with construction. From coal mines to construction, Carnegie  Steel took everything under its control.  

Let's see how the Adani group is doing the same thing.

 Check out the brilliant strategic positioning of the major businesses of the Adani group.  The closest thing to Adani Port Project is Adani  Port Weighbridge where all their shipments are delivered and stored.  And if you look closely you will see Adani Logistics is also nearby. On top of that, you will see Adani  Group Township and Adani Wilmar,  all these companies are geographically very close to each other. You probably figured it out by now that most of the companies of Adani Group are located closely within the same region of Gujrat. And all the businesses are very interlinked. To understand how Adani Groups begin to end business infrastructure works,  you must understand the 3  categories of their companies. 

 1. Initiators - These are companies where the production process starts. Adani Gas,  Adani Coal, Adani Renewables, Adani Iron Mines, and Adani Ports, all fall under this category. 

 2. Next level are the supporters, which include Adani Power, Adani Airports, and Adani Logistics. They support the initiating companies. 

3. Third, and most importantly,  the builders. These are the Datacenter, Transmission, Gas Distribution, Adani Wilmar, Adani Healthcare, Adani  Real estate, and Adani Infra. Builders are those companies that help to link the supporters and originators. 

Every business in the Adani Group is internally well-connected. This allows them to control everything in the market related to their products, starting from production till it reaches the end consumer. This gives them the kind of advantage that could actually explain how they were able to earn over 140 billion dollars in 4 years. Pay close attention to how they are doing this. When they control everything related to their products in the market, they are able to expand very quickly and efficiently. They are able to scale in a  way that's abnormal and nearly impossible for their competitors to replicate. Hence the development of a naturally occurring monopoly. And we all know wherever there is a monopoly, there are massive profits.

 But there is a dark side to it. Behind every success there are controversies.  And the Adani Group is no different. In 2018, the Indian government released a tender to privatize 6 airports. Earlier than this, the government used to give the contract to companies that had prior experience in running and building airports. But this time they decided to relax the rules and allow companies with no experience to bid for that tender. And guess who won ALL 6 of the tenders? Yes, the Adani Group. They paid 2,440 crore Indian rupees to the Airport Authority of India to take possession of the tender. The finance minister of Kerala called it an "act of brazen cronyism." which means there was huge partiality in awarding the contract. We are only scratching the surface here. There is more. Adani Group is also Indian's largest port operator and largest thermal power producer. In the last year , Gautam Adani's net worth increased by more than 500%.

 That raises the burning question, how does Gautam Adani do all this so easily? The answer is Oligarchy. Which means  "Powerful Political Connections". Everywhere in the world, it's common thing for business people to have political connections. If you look into the US, you will see that the top billionaires are from the technology sector. Being in the tech sector gives them some tax advantages.  The best examples are FB, Amazon, Google, and Apple. Similarly, most the Russian billionaires belong to the steel and oil industries. To successfully operate in this industry,  government support is very important. Even in democratic countries like the USA, you will see that the top 1% of the population owns 40% of the wealth. This is a harsh fact but we all have to accept it. Large business tycoons with strong political connections always get the support of the government, and they will continue to get it. The world runs on capitalism, and this is just how things are.  According to the Indian Express, the Adani  Group is under a debt of 30 billion USD. And if they can manage it properly they will be able to bring massive growth in India. The  speed at which they are growing and constantly interconnecting their new ventures are helping them to open doors of opportunity that did not exist before. Airport, Sea Port, Electricity, Gas Distribution, one by one they are taking everything under their control. The biggest advantage of this is that everything will be well connected in India, which will take the infrastructure growth of India to the next level.

Lesson 1 -

  Understanding the risks involved can destroy a company. Even though Adani Group is under a lot of debt, they are expanding rapidly. If you look at their financial statements, you will see that every company is generating good profits. That is why they are able to manage these expansion loans. 

 Lesson 2 - 

Take advantage of the loopholes.  To a lot of people, this might sound wrong and unethical, but that's not always the case. It is unethical only when you are breaking laws. All system has loopholes and if you are smart enough you can use it to earn some good profit from it as long as it is not an unlawful act. All big businesses are using loopholes. Adani Group used the loophole to import large quantities of PVC granules.

 Final lessons -

 Learn to give up the good to go for the great. Quoting John D Rockefeller. More often than not, we get very attached to a particular product or a certain way of doing something, because of which we turn a blind eye to the changes in the market. Time is constantly changing everything around us. An idea that was profitable before may not be profitable now. All large corporations that are successful now, have learned to adapt over time. That is why they are still standing now. Adani Group moved from traditional businesses to renewable energy and data centers.

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