WEBVTT - $200 Billion, Four Heirs And One Mighty Indian Empire

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. In twenty eighteen, Asia's

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<v Speaker 1>second richest man, Galto Madonni, invited his brother's, sons and

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<v Speaker 1>nephews to his home for a meal.

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<v Speaker 2>All seven of them were sitting around the dining table

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<v Speaker 2>having lunch and very unexpectedly.

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<v Speaker 1>Galto Madonni pop the question how do you see the future?

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<v Speaker 2>Do you guys want to carve up the business between

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<v Speaker 2>you or do you want to run the NDAI business

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<v Speaker 2>assist single family.

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<v Speaker 1>The business Galtam was asking them about is the Adanni Group,

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<v Speaker 1>a sprawling conglomate which started with the company set up

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<v Speaker 1>by Galtham and his brothers back in nineteen eighty eight. Today,

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<v Speaker 1>the Adnni Group is worth more than two hundred and

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<v Speaker 1>ten billion US dollars and touches almost every facet of

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<v Speaker 1>daily life in India.

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<v Speaker 2>When you switch on the electric bulb at the home,

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<v Speaker 2>his business is touching your life. When you are buying

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<v Speaker 2>groceries from the shop, his business is touching your life.

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<v Speaker 2>When you are looking to buy a house, his business

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<v Speaker 2>is touching your life.

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<v Speaker 1>Anto Anthony is an editor at Bloomberg News based in

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<v Speaker 1>Mumbai covering South Asia and he says, for years Galtum

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<v Speaker 1>has been essentially the super CEO of the Adanni Group,

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<v Speaker 1>making all the decisions for the entire conglomerate. But now

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<v Speaker 1>he was asking the family members before him, his only

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<v Speaker 1>two sons and two nephews, how they want to run

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<v Speaker 1>the company when he the patriarch, steps down. The question

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<v Speaker 1>surprised the younger Adanni's.

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<v Speaker 2>Because Gadomadani was still in his fifties. None of them

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<v Speaker 2>thought that he's thinking about succession or transition.

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<v Speaker 1>He gave them three months to work it out, and

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<v Speaker 1>when they came back, it was a united front.

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<v Speaker 2>They said that we have seen my father and his

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<v Speaker 2>brothers working together to build up this legacy, and we

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<v Speaker 2>always work grow together, so there was no doubt in

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<v Speaker 2>their mind that they should stay together.

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<v Speaker 1>It's a bold move for a wide ranging group whose

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<v Speaker 1>units span everything from airports to solar farms, and this

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<v Speaker 1>succession is poised to be one of the world's largest

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<v Speaker 1>and most challenging transfers of wealth. Bloomberg sat down with

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<v Speaker 1>Galtam and his four airs for a series of exclusive

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<v Speaker 1>interviews about what this transfer will look like.

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<v Speaker 3>Succession is a very, very important for the business sustainability,

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<v Speaker 3>and it must be is the organic, gradual and a

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<v Speaker 3>very systematic.

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<v Speaker 1>Welcome to The Big Take Asia from Bloomberg News.

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<v Speaker 4>I'm one half.

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<v Speaker 1>Every week we take you inside some of the world's

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<v Speaker 1>biggest and most powerful economies and the markets, tycoons and

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<v Speaker 1>businesses that drive this ever shifting region. Today on the show,

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<v Speaker 1>Bloomberg's exclusive interviews with the Adonis, how the family envisions

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<v Speaker 1>an a Donni group without their patriarch at the helm,

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<v Speaker 1>and what's at stake for India's economy. Galta Madonni's first

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<v Speaker 1>big break came when he decided to help his brother

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<v Speaker 1>with his plastics factory. That's when he got into global

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<v Speaker 1>trading by importing polyvinyl chloride or PVC for his brother's business,

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<v Speaker 1>and it led him to set up his flagship company,

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<v Speaker 1>what would become a Donni Enterprises in nineteen eighty eight.

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<v Speaker 2>That's where he got his first real break. From there,

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<v Speaker 2>he started exploring projects in ports sector. He set up

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<v Speaker 2>Mundra Port, which is as of now one of the

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<v Speaker 2>largest ports in India. After that, we are seeing a

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<v Speaker 2>meteoric growth which really gathered pace after twenty ten. Many

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<v Speaker 2>people say that it is very closely associated to Prime

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<v Speaker 2>Minister Narendra Modi's ascent.

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<v Speaker 1>Adanni's businesses have often been closely aligned with Prime Minister

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<v Speaker 1>Narandro Modi's priorities, and the Adani Group has stepped in

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<v Speaker 1>where the nation lacked resources like an infrastructure and green energy.

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<v Speaker 2>India is a country of one point four billion people,

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<v Speaker 2>but it really lacks infrastructure, whether it is roads, ports, airports. Power.

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<v Speaker 2>Energy is a huge issue out here. There are so

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<v Speaker 2>many millions of household which doesn't have access to electricity.

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<v Speaker 2>So that's how when Gaudamadhani decides to step in and

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<v Speaker 2>help build this infrastructure, his priorities and business interest got

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<v Speaker 2>aligned well with that of the federal or state governments

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<v Speaker 2>in India. So as he himself puts it, when you

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<v Speaker 2>align your interest with the governments, it always gives you

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<v Speaker 2>tailwinds rather than headwinds, and it has really propelled his

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<v Speaker 2>business forwards and along with it his wealth.

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<v Speaker 1>The Adani Group is India's biggest importer of coal, it's

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<v Speaker 1>the largest owner of solar farms, and Adani owned ports

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<v Speaker 1>carry almost half the country's shipping containers, while more than

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<v Speaker 1>ninety million people use their airports each year and for years,

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<v Speaker 1>the Adanni group appeared to flourish with infrastructure projects like these.

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<v Speaker 1>Galtam is currently Asia's second richest man and one of

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<v Speaker 1>the most influential business leaders.

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<v Speaker 4>In the world.

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<v Speaker 1>He's worth more than one hundred billion US dollars. But

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<v Speaker 1>last year something happened that put the Adanni Group's success

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<v Speaker 1>at risk.

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<v Speaker 5>So just to give the high level understanding of who

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<v Speaker 5>Hindenburg Research is.

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<v Speaker 1>In a daring short selling attack, a New York based

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<v Speaker 1>group called Hindenburg Research accused the Adanni Group of the

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<v Speaker 1>largest khan in corporate history.

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<v Speaker 5>It did disclose a short position in a DNI group

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<v Speaker 5>and what it's saying basically is the conglomerate engaged in

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<v Speaker 5>market manipulation and then accounting fraud as well. Now Gotamadani

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<v Speaker 5>has denied this and he says that the report is baseless.

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<v Speaker 1>Hindenberg alleged that the Adani Group had used a web

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<v Speaker 1>of companies in tax evans to inflate its revenue and

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<v Speaker 1>manipulate stock prices. Critics have raised similar questions about the

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<v Speaker 1>conglomerate for years. The group denied all claims and noted

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<v Speaker 1>to Bloomberg that they provided a very long and comprehensive

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<v Speaker 1>response in just seventy two hours on every single point,

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<v Speaker 1>But the crisis came at a very tense moment for

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<v Speaker 1>the Adni Group.

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<v Speaker 2>This came at a time when the group was looking

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<v Speaker 2>at one of the biggest share sales in its history.

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<v Speaker 2>That share sale had to be pulled. The group lost

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<v Speaker 2>a lot in marketcap.

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<v Speaker 4>How much market cap did they lose.

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<v Speaker 2>One hundred and fifty billion dollars in a few months?

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<v Speaker 4>Wow? Huge.

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<v Speaker 2>It took them six months to eight year to asswitch

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<v Speaker 2>all these concerns and regain that market cap.

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<v Speaker 1>The Adanni Group has also faced regulatory probes at home

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<v Speaker 1>and in the US, where prosecutors were investigating whether an

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<v Speaker 1>ADNNI entity, executives linked to the company, or billionaire founder

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<v Speaker 1>Galtum himself had paid bribes to Indian officials in return

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<v Speaker 1>for favorable treatment on a green energy project. The Adanni

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<v Speaker 1>Group said none of its units has been notified of

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<v Speaker 1>the probe and that it's not aware of its chairman

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<v Speaker 1>being part of the investigation. No Adannie unit has been

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<v Speaker 1>charged with wrongdoing by the US Justice Department, and investigations

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<v Speaker 1>don't always lead to prosecutions, but the controversies swirling around

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<v Speaker 1>the conglomerate have prompted some changes there.

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<v Speaker 4>What are they doing differently after Hindenburg.

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<v Speaker 2>So they're cutting down on leverage in a big way.

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<v Speaker 2>They're putting a load of risk mitigation measures in place.

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<v Speaker 2>They're more measured in their approach towards growth and abold,

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<v Speaker 2>They're communicating more.

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<v Speaker 1>And now Anto says he's seen a huge change in

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<v Speaker 1>how the company is trying to be more transparent about

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<v Speaker 1>their operations.

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<v Speaker 2>Till the Hiddenburg report hit, many considered it as an

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<v Speaker 2>opaque group. Many knew nothing about the group or its

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<v Speaker 2>inner workings, the kind of processes they have and so on.

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<v Speaker 2>Now they are very aggressive about communicating, whether it's to

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<v Speaker 2>the investors or media.

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<v Speaker 1>And this newfound openness of the Adanni family to the

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<v Speaker 1>media may have also helped Bloomberg get rare access to

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<v Speaker 1>the tycoon and his family. Anto and a TV crew

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<v Speaker 1>spent nearly a dozen days following leaders of the Adanni Group,

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<v Speaker 1>and while Gothamdani declined to address controversies swirling around his conglomerate,

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<v Speaker 1>he did agree to talk about the family conversations around succession.

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<v Speaker 3>Succession is not en one of the event, but it

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<v Speaker 3>is a long drawn journey and my plan of succession

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<v Speaker 3>started almost decade.

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<v Speaker 1>Ago after the break what the Adani family plans might

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<v Speaker 1>mean for India and the rest of the world. Bloomberg's

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<v Speaker 1>Anto Antony was given unprecedented access to the Dani family.

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<v Speaker 4>He and a.

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<v Speaker 1>TV crew spent nearly two weeks in India visiting the

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<v Speaker 1>headquarters and meeting employees right.

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<v Speaker 2>From the janitor right up to group CEOs.

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<v Speaker 1>And taking field trips to visit their sites.

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<v Speaker 2>We went to a place called Karvda in Gujarat, which

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<v Speaker 2>is a very arid region, it said does, said Ball.

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<v Speaker 2>So what they're trying to do is they're trying to

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<v Speaker 2>cover up the area five times the size of Paris

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<v Speaker 2>with solar panels and win turbines.

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<v Speaker 1>One thing Anta wanted to talk with Galta Madani about

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<v Speaker 1>was why he was planning for succession now when he's

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<v Speaker 1>still very much engaged in the business. Galton told him

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<v Speaker 1>he and his brothers want to be around to help

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<v Speaker 1>the next generation.

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<v Speaker 2>So what Gaudamadani and his two brothers who are involved

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<v Speaker 2>in the business is trying to do is transition it

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<v Speaker 2>into the next generation at a time when they are

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<v Speaker 2>still around to oversee and correct them when needed. This

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<v Speaker 2>is a conglomerate which runs from selling apples to running airports.

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<v Speaker 2>It's a complex set of businesses spread across various sectors.

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<v Speaker 2>So the complexity of this transition is probably the reason

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<v Speaker 2>why he's thinking of it right now.

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<v Speaker 4>And when is he planning to hand over the reins.

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<v Speaker 2>He's sisty to right now. When he's seventy is when

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<v Speaker 2>the transition happens. That's when he will retire. Goadabadani is

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<v Speaker 2>looking at handing over his empire to four successors.

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<v Speaker 1>These four successors Gautam's sons, Goten and Jeet and their

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<v Speaker 1>cousins Pranav and Sagar. Pranav is the eldest among the

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<v Speaker 1>four and he's been in the business for the longest.

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<v Speaker 1>He now oversees most of the Udani Group's consumer businesses,

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<v Speaker 1>including consumer goods, media, and real estate. He's also responsible

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<v Speaker 1>for redeveloping the Darav slum, one of Asia's largest and

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<v Speaker 1>the size of Monaco. It involves relocating a million people

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<v Speaker 1>at the heart of Mumbai who call the slum their home.

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<v Speaker 1>Bloomberg followed Pranav on a visit to the area.

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<v Speaker 2>We saw many of the residents walking up to him.

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<v Speaker 2>One of the key concerns which they had was will

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<v Speaker 2>we get a home right here? They walked up to

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<v Speaker 2>Pranav they shared this concern and when they raised these

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<v Speaker 2>questions with him, he's a smooth talker with an easy

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<v Speaker 2>smile and cool demander, so he will pat them on

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<v Speaker 2>their back, hold their hands.

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<v Speaker 4>Sounds like he's also very much of a politician too.

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<v Speaker 2>If I were to pick one among the four who

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<v Speaker 2>will be able to talk to the people who are

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<v Speaker 2>staying in the slum and top executives or dignitaries in

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<v Speaker 2>the same manner, that would be prun of.

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<v Speaker 1>Next we have Kara Nadani, Gautam Madani's eldest son. Anto

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<v Speaker 1>says he's a huge Formula one fan.

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<v Speaker 2>If you walk into his sophie, you will see a

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<v Speaker 2>lot of replicares of Ferrari cars, scale models of Farari

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<v Speaker 2>cars all over the place.

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<v Speaker 1>And he manages all the ports for the Adani Group.

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<v Speaker 2>He's a no nonsense, driven, passionate guy when it comes

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<v Speaker 2>to business.

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<v Speaker 1>Then we have jet Adani, Galatam's youngest son. He's the

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<v Speaker 1>family's only trained engineer and looks after the group's airports.

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<v Speaker 1>He's also in charge of the digital businesses as well

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<v Speaker 1>as the defense unit, which makes equipment ranging from small

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<v Speaker 1>arms to missiles.

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<v Speaker 2>He's the one who has got most of the mannerisms

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<v Speaker 2>of Gaudamdani, Like he's a very affable guy. But I

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<v Speaker 2>saw that when an executive tell him that something is

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<v Speaker 2>not doable, he just lost his school and raised his voice.

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<v Speaker 2>So I asked him why, and he said that it's

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<v Speaker 2>because his pet peew is that somebody telling him that

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<v Speaker 2>something is not doable without trying it out and giving

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<v Speaker 2>the rational after trying it out.

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<v Speaker 1>Then we have Saga Adani, the youngest nephew, got them.

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<v Speaker 1>He oversees the group's energy business as well as finance.

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<v Speaker 2>He's the face to the investors, like he's mostly traveling,

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<v Speaker 2>like two toy day's a month, he's traveling.

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<v Speaker 1>And how this succession plan will come together? Well, the

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<v Speaker 1>businesses have been split between the four younger Adannis, with

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<v Speaker 1>each heading their own units, but when it comes to

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<v Speaker 1>the decisions that affect the entire group, the four have

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<v Speaker 1>agreed to make the call together. And so how is

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<v Speaker 1>this going to work in reality? Because you've essentially got

0:13:59.679 --> 0:14:03.400
<v Speaker 1>four I mean, who calls a shot if there's a disagreement.

0:14:03.840 --> 0:14:06.280
<v Speaker 2>So they're very clear that there is not going to

0:14:06.320 --> 0:14:10.360
<v Speaker 2>be a first among the equals. All four will have equals,

0:14:10.360 --> 0:14:14.320
<v Speaker 2>say in management. So now if you are to take

0:14:14.600 --> 0:14:18.640
<v Speaker 2>a major strategy decision, then all four has to be

0:14:18.720 --> 0:14:21.400
<v Speaker 2>on board. It is going to be a joint decision making.

0:14:22.040 --> 0:14:23.760
<v Speaker 4>That sounds too good to be true.

0:14:24.280 --> 0:14:27.480
<v Speaker 2>That is what everybody is telling me. Most of the

0:14:27.520 --> 0:14:32.040
<v Speaker 2>succession experts I talked to made that point. Some of

0:14:32.040 --> 0:14:35.440
<v Speaker 2>them even said that you have to work against basic

0:14:35.600 --> 0:14:39.520
<v Speaker 2>instincts of human beings to make this work, because at

0:14:39.560 --> 0:14:43.640
<v Speaker 2>some point meritocracy will come up, some people will be

0:14:43.720 --> 0:14:48.119
<v Speaker 2>more committed to the businesses and will build their businesses

0:14:48.200 --> 0:14:49.240
<v Speaker 2>up in a better way.

0:14:49.720 --> 0:14:53.120
<v Speaker 1>And so did Press Prana the eldest Air on how

0:14:53.200 --> 0:14:56.640
<v Speaker 1>realistic this new joint management structure actually is.

0:14:57.120 --> 0:15:02.120
<v Speaker 2>Transition plans at various large conglomerates had failed due to

0:15:02.440 --> 0:15:07.720
<v Speaker 2>internal officials within the next generation. What plans the group

0:15:07.760 --> 0:15:10.520
<v Speaker 2>is putting in place to make sure that that doesn't happen.

0:15:10.760 --> 0:15:13.120
<v Speaker 6>I don't know if you're aware, but we as a family,

0:15:14.040 --> 0:15:18.400
<v Speaker 6>we have lunch every day together. Chairman, my uncle, my

0:15:18.440 --> 0:15:22.600
<v Speaker 6>father when he is there, and the whole second generation,

0:15:22.840 --> 0:15:25.960
<v Speaker 6>we all actually have lunch together. We discuss issues, so

0:15:26.000 --> 0:15:29.520
<v Speaker 6>there's a lot of communication happening. Having said that, everyone

0:15:29.640 --> 0:15:33.160
<v Speaker 6>is of course looking at different businesses, and though we

0:15:33.200 --> 0:15:36.479
<v Speaker 6>are looking at different businesses, we are like one team

0:15:36.640 --> 0:15:40.440
<v Speaker 6>when it comes to discussions like talent management, how we

0:15:40.600 --> 0:15:42.600
<v Speaker 6>look at the future of the company.

0:15:43.000 --> 0:15:46.400
<v Speaker 1>And when it comes to Galtam's personal fortunes some one

0:15:46.480 --> 0:15:50.160
<v Speaker 1>hundred billion dollars of it, Anto sources told them it

0:15:50.200 --> 0:15:53.000
<v Speaker 1>would also be split equally among the four.

0:15:53.400 --> 0:15:56.640
<v Speaker 2>All this is held through a trust, the family Trust,

0:15:57.160 --> 0:16:01.080
<v Speaker 2>and areas down the line, when god Madani turns seventy,

0:16:01.560 --> 0:16:05.040
<v Speaker 2>each of the second generation will become an equal beneficiary

0:16:05.120 --> 0:16:08.840
<v Speaker 2>of that trust. If we were doing it today, each

0:16:08.880 --> 0:16:11.640
<v Speaker 2>of them could have got about twenty five billion dollars.

0:16:11.960 --> 0:16:14.320
<v Speaker 2>But then we have to keep in mind the meteoric

0:16:14.440 --> 0:16:17.000
<v Speaker 2>rise in wealth of the group. So seven years down

0:16:17.000 --> 0:16:19.960
<v Speaker 2>the line, it is anybody's guess what they will be inherited.

0:16:20.320 --> 0:16:25.960
<v Speaker 1>Center billionaires for sure, and Anto says this humongous wealth

0:16:26.000 --> 0:16:31.000
<v Speaker 1>transfer and leadership transition doesn't just concern this single family.

0:16:32.360 --> 0:16:36.720
<v Speaker 1>There's far reaching ramifications for India's three point five trillion

0:16:36.840 --> 0:16:41.760
<v Speaker 1>dollar economy and its future development. One reason for that

0:16:41.960 --> 0:16:44.360
<v Speaker 1>is that the Idani group has played such a key

0:16:44.480 --> 0:16:47.560
<v Speaker 1>role in helping India shore up its infrastructure.

0:16:48.080 --> 0:16:53.160
<v Speaker 2>There's a lot of deficiencies in the infrastructure, so Adani

0:16:53.320 --> 0:16:56.080
<v Speaker 2>is somebody who has come up and has been trying

0:16:56.120 --> 0:16:59.800
<v Speaker 2>to plug that gap. We haven't seen anybody trying to

0:16:59.800 --> 0:17:05.560
<v Speaker 2>do with at this scale ever in independent India's history.

0:17:05.600 --> 0:17:08.240
<v Speaker 2>So his success is very important because if he succeeds,

0:17:08.280 --> 0:17:12.080
<v Speaker 2>then India will be able to grow at a faster pace.

0:17:13.480 --> 0:17:17.159
<v Speaker 2>And India growing at a faster pace and living up

0:17:17.200 --> 0:17:21.680
<v Speaker 2>to his potential is quite important for the global economy

0:17:21.720 --> 0:17:25.560
<v Speaker 2>also because as the powerhouses like China to Germany are

0:17:25.600 --> 0:17:29.960
<v Speaker 2>facing its own issues and brokerage Houses has been pointing

0:17:30.000 --> 0:17:32.960
<v Speaker 2>out that India is among the countries which has to

0:17:33.080 --> 0:17:37.560
<v Speaker 2>contribute most to pull up the slack. So not only

0:17:37.560 --> 0:17:40.240
<v Speaker 2>for India, but even for the global economy, it is

0:17:40.320 --> 0:17:43.720
<v Speaker 2>quite important that this succession plan succeeds.

0:17:48.000 --> 0:17:51.120
<v Speaker 1>And what about galtem If this all goes well.

0:17:51.119 --> 0:17:53.600
<v Speaker 2>Once a transition is complete and once you have more

0:17:53.640 --> 0:17:57.160
<v Speaker 2>time at hand, what would be your plans?

0:17:57.160 --> 0:18:00.600
<v Speaker 3>Oh, ultimately we will retire more relax.

0:18:05.440 --> 0:18:07.879
<v Speaker 1>This is the big take Asia from Bloomberg News.

0:18:08.119 --> 0:18:08.959
<v Speaker 4>I'm wanha.

0:18:09.560 --> 0:18:13.840
<v Speaker 1>This episode was produced by Young Young Naomi m Jessica Beck,

0:18:13.920 --> 0:18:17.000
<v Speaker 1>and Alex Sugia, who also mixed it. It was fact

0:18:17.080 --> 0:18:20.400
<v Speaker 1>checked by Naomi and edited by Caitlin Kenny and Alyssa McDonald.

0:18:20.960 --> 0:18:23.960
<v Speaker 1>Our senior producers are name Is Shaven and Kim Gettlson.

0:18:24.320 --> 0:18:28.240
<v Speaker 1>Our senior editor is Elizabeth Ponso. Nicole Beemster Bower is

0:18:28.280 --> 0:18:32.119
<v Speaker 1>our executive producer, and Sage Bowman is Blomberg's head of podcasts.

0:18:32.640 --> 0:18:35.560
<v Speaker 1>Please follow and review The Big Take Asia wherever you

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0:18:38.960 --> 0:18:39.760
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