(MENAFN- The Arabian Post)

By Nantoo Banerjee

The majority government-owned Life Insurance Corporation of India's detailed rebuttal to The Washington Post report claiming that the government directed LIC to invest $3.9 billion in the Adani group seems to lack the punch. A comparison of the lately sprouted Adani Group with some of India's age-old business conglomerates such as the Tatas, Aditya Birla Enterprises, ITC, HDFC Bank and SBI in terms of LIC's wider corporate investments was probably avoidable, if not totally unnecessary.

All major corporate and institutional investment decisions are based on policies okayed by the board, after due diligence. No one questions the LIC board's standard desk work in defence of its latest investment decision in the Adani group. The issue is different. Could the investment decision have been influenced by the Government of India? It is unlikely that The Washington Post, the third largest US newspaper after The New York Times and The Wall Street Journal, had put up a totally fake story on the Adani-government connect.

The Washington Post report was specific. It alleged that government officials“drafted and pushed through a proposal to direct about $3.9 billion of LIC funds into Adani Group companies, in coordination with LIC and NITI Aayog – at a time when the Adani Group was dealing with rising debt and reduced access to major western banks. According to reports, as of mid-2025, the Adani Group's total debt was around Rs.2.6 lakh crore, a 20 percent rise in the 12 months ended June, last. A significant portion of this debt, roughly half, comes from domestic banks and financial institutions, mostly under the government control.

The Adani group's debt came only second to Reliance Industries (RIL), which reported gross debt of Rs. 3,47,530 crore. RIL's net debt was Rs.1,17,083 crore. The century old Tata group's total debt as of the current year could be much less, varying by company and reporting period. For instance, Tata Motors reported a total debt of Rs.62,499 crore as of March 2025, while Tata Consultancy Services (TCS) had a total debt of Rs.10,900 crore as of September 30, this year. Tata Steel reported a net debt of Rs.84,835 crore as of June 30, last.

Notably, the Adani Group has never defaulted on its debt servicing obligations. That could attract the attention of term investors, including LIC. Also, there seems to be nothing wrong if the government-controlled LIC (under the union finance ministry) management consults its principal stakeholders before making a big corporate investment. Key considerations before financial investors in an enterprise include risk tolerance, desired return, income needs and investment horizon. A combination of both equity and debt is often used to balance risk and return.

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Incidentally, not all the Adani Group companies' credit ratings, which vary by rating agencies, appear to be very attractive. The Adani Ports and Special Economic Zone (APSEZ) debt enjoys a AAA credit rating from several domestic credit rating agencies although its international rating from agencies like S&P and Moody's is lower, seen as stable or improving outlooks. Ratings can be complex, and these are often influenced by the specific debt instrument, the financial performance of the subsidiary, and the strength of the parent company. Overall, a stable outlook is being reaffirmed by major agencies like S&P, Moody's, and Fitch for several key Adani entities.

However, it is the meteoric rise of the Adani group since the Narendra Modi government came to power at the Centre in May, 2014, that seems to attract the attention of the business as well as political circles across the country as also in some parts of the world. Interestingly, Adani's acquisitions of government projects are numerous and span various sectors, including energy, airports, and ports.

Examples include winning bids for a 2,400 MW power plant in Bihar, acquiring stakes in airports through a government privatization initiative, and gaining a lease on land for a solar park in Rajasthan. Some acquisitions have been controversial, such as allegations of favourable land deals in Bihar and a single-bidder scenario for a coal block, while others were achieved through government tenders and policy changes, such as the port concession rules that allowed for equity divestment.

According to reports, Adani Power received a letter of intent for a 2,400 MW thermal power plant in Bihar, which includes a 1,050-acre land lease from the Bihar government for a nominal cost. The project has been criticized by the Bihar Congress for being a handout to the company. The Adani Group got ownership of the Gondbahera-Ujjaini coal block in 2022 as a sole bidder in the government's auction. The Rajasthan government leased 1,600 hectares of land to Adani Group for a 1,500 MW solar park.

The group acquired stakes in several airports, including Mumbai International Airport, during a government privatization initiative. A Shiv Sena-Congress-NCP government in Maharashtra handed over the Dighi port to Adani to develop a new gateway. The group was given a 49 percent stake in the Maharashtra Border Check Post Network. The Jharkhand government awarded Adani Group an SEZ (Special Economic Zone) covering over 425 hectares. Adani Power won a power supply contract from the Punjab government.

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The group's expansion since 2014 has been enormous. In 2013, the Adani Group reportedly had a turnover of only Rs.47,000 crore. The Group's consolidated revenue for FY2025 was Rs.2,71,664 crore. In September 2013, the combined market capitalization of its three listed entities (Adani Enterprises, Adani Power, and Adani Port and Special Economic Zone) was Rs.51,573 crore. By May 2014, due to a stock rally that began in September 2013, the group had become the ninth most-valued corporate house in India.

The group's size and rapid expansion drew comparisons to the early growth phase of the Reliance group under Dhirubhai Ambani, which also attracted a lot of critical attention at home and abroad. Incidentally, the book“The Polyester Prince: The Rise of Dhirubhai Ambani” by Hamish McDonald is effectively banned in India due to legal threats from the Ambani family who sought an injunction based on“anticipatory defamation”. The book's Indian publisher, Harper Collins, withdrew the book before its official release in 1997, leading to it being unavailable in Indian bookshops.

Yet, the fact remains that an industry-government relationship, pleasant or hostile, is not unique to India. The Tata Iron and Steel Company, now a global entity and the world's eighth largest steel producer, was not allowed to expand by the government in the 1970s. It also faced a nationalisation threat from the government. In fact, the industry-government link is a global phenomenon. Throughout history and around the world, various forms of interaction, cooperation, and conflict have characterized the relationship between industry and government. The massive government bailout for Vodafone Idea through two major debt-to-equity conversions in 2023 and 2025, giving the Indian government a controlling stake of nearly 49 percent in the company, is designed to prevent the collapse of one of India's few remaining telecom players and preserve market competition. Few will contest the fact that a possible Adani-government link has proved to be beneficial to the country's much-needed infrastructure and power sector growth. (IPA Service )

The article Adani Group's Striking Rise Since 2014 Sparks Global Speculation appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

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