Debt is fueling the expansion of India's richest individual.

A tale of disparities also emerged in the approaches taken by the richest and second-richest Indians. Mukesh Ambani, the second richest, engaged in a deleveraging (the reduction of debt) drive to safeguard his company’s zero debt status, which involved giving up holdings in the group's future-facing areas of technology and retail. In contrast, Gautam Adani, the richest, continued on an expansion spree powered by debt. Over the previous five years, debt held by the Gautam Adani-led Group has climbed from Rs. 1 trillion to Rs. 2.6 trillion, driven by the expansion of various ventures which include investments in renewable energy, procurement of transmission business, and venturing into more recent areas such as data centers, airports, and motorways (Adani Enterprises).

Will it survive in the long run?

Although the markets appear to be optimistic in the group, history, being the most effective teacher, declares that Reliance Power and Reliance Infra in 2015–16 had identical leverage metrics and had market confidence, but were wrecked when group business Reliance Communication fell despite the group's markets appearing to be bullish. Another concern is that history does not look promising when it comes to sectors such as airports and data centers. GMR and GVK groups were in charge of airport expansion around 2005 and were unable to recoup from their debt-driven expansion, while Tulip Telecom went bankrupt under the weight of debt to build Asia's largest data center in Bengaluru. Overall, analysts have noticed that, while debt levels have risen, the group's cash flows have risen consistently, with new assets coming online and becoming operational. Adani Transmission has remained consistent for these companies, with better operations, and Adani Green has witnessed a significant improvement in asset operationalization, as a consequence of which the firm's interest servicing capabilities have not been affected by the high increase in debt.

 

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