Having started operations with just one berth in the North West of India in 1998, the port of Mundra, part of the Adani Ports & Special Economic Zone (APSEZ), is now India’s largest and is widely considered to be one of the world’s most integrated multi-purpose and multi-cargo commercial ports.
To find out how this tremendous success was achieved in such a short span of time, Sameer Bhatnagar (KPMG in India) sat down with Gautam Adani, Chairman of the Adani Group.
Sameer Bhatnagar (SB): Many regard you as India’s King of Ports. How has your business model set you up for success?
Gautam Adani (GA): It is our belief in an integrated business model that has been the key to our success. Each of the dimensions we focus on feed off each other: ports require rail linkages and the more cargo you attract to the ports, the more economically feasible the rail investment becomes. Being able to offer land around the port which connects to the rail line allows industries to further capitalize on the supply chain advantages offered by our facilities. Ultimately, it’s this strategic virtuous cycle that capitalizes on the integrated business model which has been the springboard for our success.
It is this model that has allowed our group to grow tenfold in the past 10 years. We are now the number one player in India across every one of our market segments, be it ports, power, agribusiness, mining or coal trading. The port at Mundra is India’s biggest, having handled 100-million metric tons of cargo in 2013 and has been the catalyst for our growth.
SB: Creating such a large development to high international standards in such a short period of time must have been challenging. What were some of the challenges you faced over the past 16 years and how have you overcome them?
GA: Most of the big challenges we faced were the result of being the ‘first-mover’ in the Indian market. Policies were often still being formulated by the government and we did not have the brand recognition as a major player in these sectors, so it was often difficult for us to attract the best industry talent.
Our own internal priorities have also created unique challenges. For example, we are very focused on speed of execution and therefore it was difficult to find suppliers who could meet our timelines as well as the high standard of work expected. We were also focused on creating capacity well ahead of demand which creates significant risks, particularly if the economy were to stall.
I think our greatest success in overcoming these challenges was – and continues to be – achieved by empowering our people and trusting them. Many of them initially were new to these types of businesses and had to learn on the job. Looking back, this brought certain advantages: our team wasn’t hampered by preconceived notions of how things should be done or what their role entailed. They took a fresh perspective on everything they did, and just believed they could make this happen. One of the results is the Mundra Port.
SB: How did that ‘first-mover’ advantage impact or influence the benchmarks you monitored during development and operations?
GA: Given our first-mover status, many of our benchmarks are focused on speed of execution rather than comparing against other similar projects. In fact, speed of execution has been our mantra from the beginning and it is something we won’t compromise on – even if it means spending more to meet our timelines. As a result, we tend to deliver projects a third faster than traditional similar builds anywhere in the world.
Another area that we were very clear about is the level of automation, use of technology, and quality of our equipment. It is easy for people to pigeon-hole India as a country built on low-cost labor; but the reality is that our ports are as automated as any of the best around the world. We are constantly evaluating what technologies and equipment our competitors are using to ensure that we always offer the best in class. There is no compromise on this technology front. We were clear we would set our own path here.
Overall, based on my own personal journey, I strongly advocate leading organizations be their own benchmark. Benchmarks can often be limiting because, once people hit the benchmark, they tend to stop trying to improve further. I have found that there’s absolutely no limit to what ordinary people can accomplish if they’re given the opportunity and the encouragement. Our people are the best testament to this.
SB: Do you have any advice for foreign players seeking to enter the Indian marketplace?
GA: I would say that foreign players need to plan and think locally if they want to succeed in this market. Over the next three decades, India will be one of the world’s top three markets for literally everything related to infrastructure. Those interested in participating in this boom should start planning now; those that succeed in this market will have patience, will take a longer-term view and will partner with local organizations to accelerate their learning about the Indian market.
Long-term thinking is also important for growth. I believe that, only when you think in the long-term can you think big and not be restrained in your vision. Over the past few years, many businesses seem to have moved away from this belief and have actually created opportunities for those companies that refuse to be shackled down by short-term goals.
SB: Can you share any of your future plans for the Port and the Group?
GA: Our vision is to be a globally-admired integrated infrastructure company and every step in our journey of connecting ports to power plants to mining has moved us towards increased alignment with our vision. By 2020 we want to be producing more than 20,000 megawatts of power; extracting 200 million metric tons of coal from our own mines; and managing 200 million metric tons of cargo at our own ports – all seamlessly integrated. In fact, we now expect to achieve our 200 million metric tons of cargo goal by 2017 and are in the process of revising this target for 2020.
Also, our recent acquisition of Australia’s Carmichael coal mine (which, at peak production can produce 100 million metric tons of thermal coal annually) and the Abbot Point Port not only represents the largest investment from India into Australia ever, it also allows us to unlock enormous resource potential and increase traffic through our other facilities and ports.
I firmly believe that we will remain the top domestic private player in all of our core business sectors across resources, logistics, and energy. As we grow, I also expect that we will expand into other areas adjacent to our core as we come across new business opportunities. We are only just starting on our journey to integrate infrastructure across India. I am certain that Adani Group will play a leading role in that transition and therefore do its part in nation-building.