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From the Editor: Risks and rewards

Business Today Editor Prosenjit Datta discusses Gautam Adani's investment in Australian coal and the special magazine package on India's Best Banks for 2014.

Business Today Editor Prosenjit Datta

Business Today Editor Prosenjit Datta (BT Photo)

Gautam Adani is hardly afraid of taking risks. If he were, he wouldn't have dropped out of college to become an entrepreneur. Or embarked on building a greenfield port in Gujarat in the mid-'90s, despite having no experience in the infrastructure sector till then. In fact, Adani has built his Rs 56,225.86 crore in revenues empire by taking enormous risks. Today, the Adani group is one of the biggest infrastructure players in the country, with interests in ports, mining and power.

Even by his standards though, the bet he is taking on the Australian coal is huge. He is spending upwards of $10 billion (Rs 60,000 crore) on this ambitious operation - which will see him developing a coal mine, building a railway line to transport that coal to the port which he has bought in Abbot Point, Queensland, and then shipping it to India largely for his own power plants. He also plans to sell this coal to other power plants in India and overseas. He is taking on enormous debt, and he is battling myriad opponents in Australia to make his dream come true.

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Business Today January 18, 2015 issue


His Australian play - if it succeeds - will catapult him into the global league of infrastructure players. But to make it succeed, Adani needs not only superb project management skills but also a big dollop of luck. The last time he took a bet on coal mines in another country, it did not work out too well for him. Adani had picked up mines in Indonesia, expecting the coal mined there to feed his power plants in India.

Unfortunately, the Indonesian government changed its rules of coal exports, and that made the Indonesian coal unviable for him. Will his bet in Australia succeed? Our cover story this issue looks at exactly what Adani has taken on Down Under and what needs to be in place for him to pull off his gamble.

This issue also carries our special package on India's Best Banks, a study that we conduct every year with knowledge partners KPMG. For the study this year, we have kept the methodology largely unchanged from last year's. We looked at 65 scheduled commercial banks. Annual results for the past three years were scrutinised for the study.

Based on the size of their balance sheets, the banks were classified as large, medium, small and very small. We looked at growth rates, size and strength to come up with our final rankings. To gauge the strength of a bank, we looked at its capital adequacy, quality of assets, quality of earnings and productivity and efficiency.

In the BT-KMPG study, HDFC Bank emerged as the best bank for the second consecutive year. However, competition is nipping at its heels. ICICI Bank, India's biggest private sector bank, came second in our study, losing out to HDFC Bank by a whisper. Aditya Puri, MD & CEO of HDFC Bank, is trying his level best to see that his organisation retains its lead even in the future. He is transforming his bank from a bricks-and-mortar entity to a digital powerhouse. He knows that both the opportunities and threats for HDFC Bank will come from the mobile revolution.

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