Ambani-Adani's Mahan Energen deal: A win-win situation for both giants

The Mundra Port and Special Economic Zone (SEZ) in Gujarat, India, has been the site of a significant business collaboration between two Indian industrial giants, Reliance Industries Limited (RIL), led by Mukesh Ambani, and Adani Group, headed by Gautam Adani. This partnership took the form of the Mahan Energy Limited (MEL) deal, which was announced in 2016.

The primary focus of the MEL deal was to establish a captive power plant to meet the energy requirements of RIL's coal-to-chemicals project at the Mundra SEZ. However, it is essential to note that this collaboration was not just about energy supply; it was also driven by strategic intentions that would benefit both companies in various ways.

RIL, India's largest private sector company, has a diverse business portfolio, including oil and gas, petrochemicals, retail, and telecommunications. On the other hand, Adani Group, which started as a commodities trading company, has expanded into various sectors such as ports, logistics, power, and coal mining.

The MEL deal provided Adani Group with an opportunity to enter the petrochemicals sector, as RIL agreed to supply ethane and ethylene to Adani's petrochemicals unit at Mundra. This arrangement would help Adani in setting up its petrochemicals business, which was a significant step towards vertical integration and diversification.

For RIL, the collaboration offered several advantages. First, it ensured a reliable and steady supply of coal for its coal-to-chemicals project, which was crucial for its operations. Second, it reduced RIL's dependence on external power suppliers, as the captive power plant would cater to its energy needs. Lastly, it provided RIL with an opportunity to strengthen its relationship with Adani Group, which could lead to potential future collaborations or synergies between the two companies.

The MEL deal was a win-win situation for both RIL and Adani Group, as it addressed their immediate business needs while also providing long-term strategic benefits. The collaboration demonstrated the potential for partnerships between Indian industrial conglomerates to create value through shared resources, expertise, and synergies.