Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We've all heard succession stories gone wrong, families and businesses
Speaker 2: torn apart by battles over control. But there's another succession
Speaker 2: story unfolding in India right now that looks very different.
Speaker 2: Bloomberg spent nearly two weeks with the Adonis, the family
Speaker 2: behind in over two hundred billion dollar conglomerate. I'm Sarah Holder,
Speaker 2: and today on the Big Take, Bloomberg's Wanha takes us
Speaker 2: inside the world of this powerful family firm and reveals
Speaker 2: what lessons other businesses might take from its plans for
Speaker 2: the future.
Speaker 1: In twenty eighteen, Asia's second richest man, Galto Madonni, invited
Speaker 1: his brother's sons and nephews to his home for a meal.
Speaker 3: All seven of them were sitting around the dining table
Speaker 3: having lunch, and very unexpectedly.
Speaker 1: Galto Madanni pop the question, how do you see the future?
Speaker 3: Do you guys want to carve up the business between
Speaker 3: you or do you want to run the anti business
Speaker 3: ass a single family.
Speaker 1: The business Galtam was asking them about is the Adanni Group,
Speaker 1: a sprawling conglomerate which started with the company set up
Speaker 1: by Galtham and his brothers back in nineteen eighty eight. Today,
Speaker 1: the Adnni Group is worth more than two hundred and
Speaker 1: ten billion US dollars and touches almost every facet of
Speaker 1: daily life in India.
Speaker 3: When you switch on the electric bulb at the home,
Speaker 3: his business is touching your life. When you are buying
Speaker 3: groceries from the shop, his business is touching your life.
Speaker 3: When you are looking to buy a house, his business
Speaker 3: is touching your life.
Speaker 1: Anto Anthony is an editor at Bloomberg News based in Mumbai,
Speaker 1: covering South Asia, and he says, for years Galtum has
Speaker 1: been essentially the super CEO of the Adnni Group, making
Speaker 1: all the decisions for the entire conglomerate. But now he
Speaker 1: was asking the family members before him, his only two
Speaker 1: sons and two nephews, how they want to run the
Speaker 1: company when he the patriarch, steps down. The question surprised
Speaker 1: the younger Adanni's.
Speaker 3: Because Godo Madani was still in his fifties. None of
Speaker 3: them thought that he's thinking about succession or transition.
Speaker 1: He gave them three months to work it out and
Speaker 1: when they came back, it was a united front.
Speaker 3: They said that we have seen my father and his
Speaker 3: brothers working together to build up this legacy, and we
Speaker 3: always work grew together, so there was no doubt in
Speaker 3: their mind that they should stay together.
Speaker 1: It's a bold move for a wide ranging group whose
Speaker 1: units span everything from airports to solar farms, and this
Speaker 1: succession is poised to be one of the world's largest
Speaker 1: and most challenging transfers of wealth. Bloomberg sat down with
Speaker 1: Galtum and his four heirs for a series of exclusive
Speaker 1: interviews about what this transfer will look like.
Speaker 4: Succession is a very very important for the business sustainability
Speaker 4: and it must be is the organic, gradual and now
Speaker 4: very systematic.
Speaker 1: Welcome to The Big Take Asia from Bloomberg News. I'm
Speaker 1: wan Haf. Every week we take you inside some of
Speaker 1: the world's biggest and most powerful economies and the markets,
Speaker 1: tycoons and businesses that drive this ever shifting region. Today
Speaker 1: on the show, Bloomberg's exclusive interviews with the Adonis, how
Speaker 1: the family envisions an Adanni group without their patriarch at
Speaker 1: the helm, and what's at stake for India's economy. Galta
Speaker 1: Madonni's first big break came when he decided to help
Speaker 1: his brother with his plastics factory. That's when he got
Speaker 1: into global trading by importing polyvinyl chloride or PVC for
Speaker 1: his brother's business, and it led him to set up
Speaker 1: his flagship company what would become Adani Enterprises in nineteen
Speaker 1: eighty eight.
Speaker 3: That's where he got his first real break. From there,
Speaker 3: he started exploring projects in ports sector. He set up
Speaker 3: Mundra Port which is as of now one of the
Speaker 3: largest ports in India. After that, we are seeing a
Speaker 3: meteoric growth which really gathered pace after twenty ten. Many
Speaker 3: people say that it is very closely associated to Prime
Speaker 3: Minister Naredra Modi's ascent.
Speaker 1: Adani's businesses have often been closely aligned with Prime Minister
Speaker 1: Narendra Modi's priorities and the Adani Group has stepped in
Speaker 1: where the nation lacked resources like an infrastructure and green energy.
Speaker 3: India is a country of one point four billion people,
Speaker 3: but it really lacks infrastructure, whether it is raw sports, airports, power.
Speaker 3: Energy is a huge issue out here. There are so
Speaker 3: many millions of household which doesn't have access to electricity.
Speaker 3: So that's how when Gaudamadani decides to step in and
Speaker 3: help build this infrastructure, his priorities and business interest got
Speaker 3: aligned well with that of the federal or state governments
Speaker 3: in India. So as he himself puts it, when you
Speaker 3: align your interest with the governments, it always gives you
Speaker 3: tailwinds rather than headwinds. And it has really propelled his
Speaker 3: business forwards and along with it his wealth.
Speaker 1: The Adani Group is India's biggest importer of coal, it's
Speaker 1: the largest owner of solar farms, and Nadani owned ports
Speaker 1: carry almost half the country's shipping containers, while more than
Speaker 1: ninety million people use their airports each year. And for years,
Speaker 1: the Adanni Group appear to flourish with infrastructure projects like these.
Speaker 1: Galtum is currently Asia's second richest man and one of
Speaker 1: the most influential business leaders in the world. He's worth
Speaker 1: more than one hundred billion US dollars. But last year
Speaker 1: something happened that put the Adani Group's success at risk.
Speaker 5: So, just to give the high level understanding of who
Speaker 5: Hindenburg Research is.
Speaker 1: In a daring short selling attack, a New York based
Speaker 1: group called Hindenburg Research accused the Adani Group of the
Speaker 1: largest khan in corporate history.
Speaker 5: It did disclose a short position in a Dani Group
Speaker 5: and what it's saying basically is that the conglomerate engaged
Speaker 5: in market manipulation and then accounting fraud as well. Now
Speaker 5: Gudamadani has denied this and he says that the report
Speaker 5: is baseless.
Speaker 1: Hindenburg alleged that the Adani Group had used a web
Speaker 1: of companies in tax havens to inflate its revenue and
Speaker 1: manipulate stock prices. Critics have raised similar questions about the
Speaker 1: conglomerate for years. The group denied all claims and noted
Speaker 1: to Bloomberg that they provided a very long and comprehensive
Speaker 1: response in just seventy two hours on every single point.
Speaker 1: But the crisis came at a very tense moment for
Speaker 1: the Adnni Group.
Speaker 3: This came at a time when the group was looking
Speaker 3: at one of the biggest share sales in its history.
Speaker 3: That share sale had to be pulled. The group lost
Speaker 3: a lot in market cap.
Speaker 1: How much market cap did they lose one.
Speaker 3: Hundred and fifty billion dollars in a few months?
Speaker 1: Wow?
Speaker 5: Huge.
Speaker 3: It took them six months to a year to asswitch
Speaker 3: all these concerns and regain that market cap.
Speaker 1: The Adanni Group has also faced regulatory probes at home
Speaker 1: and in the US, where prosecutors were investigating whether an
Speaker 1: ADNNI entity, executives linked to the company, or billionaire founder
Speaker 1: Galtum himself had paid bribes to Indian officials in return
Speaker 1: for favorable treatment on a green energy project. Group said
Speaker 1: none of its units has been notified of the probe
Speaker 1: and that it's not aware of its chairman being part
Speaker 1: of the investigation. Noahdani unit has been charged with wrongdoing
Speaker 1: by the US Justice Department, and investigations don't always lead
Speaker 1: to prosecutions, but the controversies swirling around the conglomerate have
Speaker 1: prompted some changes there. What are they doing differently after Hindenburg.
Speaker 3: So they're cutting down on leverage in a big way.
Speaker 3: They're putting a load of risk mitigation measures in place.
Speaker 3: They're more measured in their approach towards growth and above ald,
Speaker 3: they're communicating more.
Speaker 1: And now Anto says he's seen a huge change in
Speaker 1: how the company is trying to be more transparent about
Speaker 1: their operations.
Speaker 3: Till the Hiddenburg reports hit, many considered it as an
Speaker 3: opaque group. Many knew nothing about the group or its
Speaker 3: inner workings, the kind of processes they have and so on.
Speaker 3: Now they are very aggressive about communicating, whether it's to
Speaker 3: the investors or media.
Speaker 1: And this newfound openness of the Adanni family to the
Speaker 1: media may have also helped Bloomberg get rare access to
Speaker 1: the tycoon and his family. Anto and a TV crew
Speaker 1: spent nearly a dozen days following leaders of the Adanni group,
Speaker 1: and while Gotham Madonni declined to address controversies swirling around
Speaker 1: his conglomerate, he did agree to talk about the family
Speaker 1: conversations around succession.
Speaker 4: Succession is not in one of the events, but it
Speaker 4: is a long drawn journey and my plan of succession
Speaker 4: started almost decade ago.
Speaker 1: After the break what the Adanni family plans might mean
Speaker 1: for India and the rest of the world. Bloomberg's Anto
Speaker 1: Anthony was given unprecedented access to the Dani family. He
Speaker 1: and a TV crew spent nearly two weeks in India,
Speaker 1: visiting the headquarters and meeting employees.
Speaker 3: Right from the janitor right up to group CEOs.
Speaker 1: And taking field trips to visit their sites.
Speaker 3: We went to a place called Kavda in Gujarat, which
Speaker 3: is a very arid region. It said does at ball.
Speaker 3: So what they're trying to do is they're trying to
Speaker 3: cover up the area five times the size of Paris
Speaker 3: with solar panels and win turbines.
Speaker 1: One thing Anto wanted to talk with Galta Madani about
Speaker 1: was why he was planning for succession now when he's
Speaker 1: still very much engaged in the business. Galtum told him
Speaker 1: he and his brothers want to be around to help
Speaker 1: the next generation.
Speaker 3: So watch Gautamadani and his two brothers, who are involved
Speaker 3: in the business is trying to do is transition it
Speaker 3: into the next generation at a time when they are
Speaker 3: still around to oversee and correct them when needed. This
Speaker 3: is a conglomerate which runs from selling apples to running airports.
Speaker 3: It's a complex set of businesses spread across various sectors.
Speaker 3: So the complexity of this transition is probably the reason
Speaker 3: why he's thinking of it right now.
Speaker 1: And when is he planning to hand over the reins.
Speaker 3: He's sisty two right now. When he's seventy is when
Speaker 3: the transition happens. That's when he will retire. Godabadana is
Speaker 3: looking at handing over his empire to four successors.
Speaker 1: These four successors are Gautum's sons Karen and Jet and
Speaker 1: their cousins Pranav and Sagar. The businesses have been split
Speaker 1: between the four younger Adanis, with each heading their own units.
Speaker 1: But when it comes to the decisions that affect the
Speaker 1: entire group, the four have agreed to make the call together.
Speaker 1: And so how is this going to work in reality?
Speaker 1: Because you've essentially got four heirs. I mean, who calls
Speaker 1: a shot if there's a disagreement.
Speaker 3: So they're very clear that there is not going to
Speaker 3: be a first among the equals. All four will have equals,
Speaker 3: say in management. So now if you are to take
Speaker 3: a major strategy decision, then all four has to be
Speaker 3: on board. It is going to be a joint decision making.
Speaker 1: That sounds too good to be true.
Speaker 3: That is what everybody is telling me. Most of the
Speaker 3: succession experts I talked to made that point. Some of
Speaker 3: them even said that you have to work against basic
Speaker 3: instincts of human beings to make this work because at
Speaker 3: some point meritocracy will come up, some people will be
Speaker 3: more committed to the businesses and will build their businesses
Speaker 3: up in a better way.
Speaker 1: And so did press Prana the eldest Air on how
Speaker 1: realistic this new joint management structure actually is.
Speaker 3: Transition plans at various large conglomerates had failed due to
Speaker 3: internal fissures within the next generation. What plans the group
Speaker 3: is putting in place to make sure that that doesn't happen.
Speaker 6: I don't know if you're aware, but we as a family,
Speaker 6: we have lunch every day together. Chairman, my uncle, my
Speaker 6: father wins in when he is there, and the whole
Speaker 6: second generation we all actually have lunch together. We discuss issues,
Speaker 6: so there's a lot of communication happening. Having said that,
Speaker 6: everyone is of course looking at different businesses, and though
Speaker 6: we are looking at different businesses, we are like one
Speaker 6: team when it comes to discussions like talent management, how
Speaker 6: we look at the future of the.
Speaker 1: Company, and when it comes to Galtum's personal fortunes, some
Speaker 1: one hundred billion dollars of it, Anto sources told them
Speaker 1: it would also be split equally among the four.
Speaker 3: All this is held through a trust, the family trust,
Speaker 3: and areas down the line, when Godomadani turns seventy, each
Speaker 3: of the second generation will be and equal beneficiary of
Speaker 3: that trust. If we were doing it today, each of
Speaker 3: them could have got about twenty five billion dollars. But
Speaker 3: then we have to keep in mind the meteoric rise
Speaker 3: in wealth of the group. So seven years down the line,
Speaker 3: it is anybody's guess what they will.
Speaker 1: Be inherited center billionaires for sure, and Anto says this
Speaker 1: humongous wealth transfer and leadership transition doesn't just concern this
Speaker 1: single family. There's far reaching ramifications for India's three point
Speaker 1: five trillion dollar economy and its future development. One reason
Speaker 1: for that is that the Idani Group has played such
Speaker 1: a key role in helping India shore up its infrastructure.
Speaker 3: There's a lot of deficiencies in the infrastructure, so Adani
Speaker 3: is somebody who has come up and has been trying
Speaker 3: to plug that gap. We haven't seen anybody trying to
Speaker 3: do it at this scale ever in independent indias history.
Speaker 3: So his success is very important because if he succeeds,
Speaker 3: then India will be able to grow at a faster pace.
Speaker 3: And India growing at a faster pace and living up
Speaker 3: to his potential is quite important for the global economy
Speaker 3: also because as the powerhouses like China to Germany are
Speaker 3: facing its own issues and brokerage Houses has been pointing
Speaker 3: out that India is among the countries which has to
Speaker 3: contribute most to pull up the slack. So not only
Speaker 3: for India, but even for the global economy, it is
Speaker 3: quite important that this succession plan succeeds.
Speaker 1: And what about galtem If this all goes well.
Speaker 3: Once the transition is complete and once you have more
Speaker 3: time at hand, what would be your plans?
Speaker 4: Oh, ultimately we will retire and be more relaxed.
Speaker 1: This is The Big Take Asia from Bloomberg News. I'm wanha.
Speaker 1: This episode was produced by Young Young Naomi m Jessica
Speaker 1: Beck and Alex Sugia, who also mixed it. It was
Speaker 1: fact checked by Naomi and edited by Caitlin Kenney and
Speaker 1: Alyssa McDonald. Our senior producers are Nami Shaven and Kim Gettelson.
Speaker 1: Our senior editor is Elizabeth Ponso. Nicole Beemster Bower is
Speaker 1: our executive producer, and Sage Bauman is Bloomberg's head of Podcasts.
Speaker 1: Please follow and review The Big Take Asia wherever you
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Speaker 1: See you next time.