Adani's rise fuels criticism of capital concentration

New Delhi: Gautam Adani's mushrooming empire has become a focus of criticism for those who believe that capital is being concentrated in the hands of a few favoured corporate titans at the expense of India's middle class, Financial Times reported.

The report said some argue the concentration of economic power in family-run conglomerates is a way to fast-track India's economic development, like the Chaebol did for post-war South Korea. But critics say the rapid consolidation of state assets is creating monopolies and stifling competition.

The report said whether India's industrialisation leaves it more closely resembling the US at the turn of the 20th century when the likes of oil magnate John D. Rockefeller wielded vast influence, or Russia in the 1990s, Adani's voracious appetite for deal-making and political instincts have ensured he will play a central role.

"Gautam Adani is very powerful, very politically well connected and very astute at using that power," says Tim Buckley, an energy analyst based in Australia who tracks India. The Adani Group declined to comment for this article, FT said.

The Adani Group's total outstanding debt came to more than $30 billion as of November 11, according to data from Dealogic, including $7.8 billion worth of bonds and $22.3 billion in loans. High debt is nothing new among Indian conglomerates but the Adani Group's rapid expansion has raised concern.

Credit Suisse warned in a 2015 "House of Debt" report that the Adani Group was one of 10 conglomerates under "severe stress" that accounted for 12 per cent of banking sector loans. Yet the Adani Group has been able to keep raising funds, in part by borrowing from overseas lenders and pivoting to green energy. The report said Adani continues to enjoy ample access to capital, both at home and overseas, and can tell investors that he has never defaulted on a loan despite highly leveraged balance sheets.

Adani Group companies tapped international debt markets with bond sales of more than $2 billion and Adani Gas sold a 37.4 per cent stake to Total for a reported $600m, which gave him ample cash flow to weather the shock of the pandemic when it hit. And international groups are queueing up to partner with the mogul.

Earlier this month, Adani announced a strategic collaboration in hydrogen and biogas with Italian gas and infrastructure group Snam.

But for others, Adani has become too big to fail. "He's become one of the most powerful men in India in the space of 20 years," Buckley says. "What he touches turns to gold," the report said.