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Adani Neither Down Nor Out: Backed By Japanese Banks, Eyes on Mumbai Airport Land, But Defaults On Andhra Pradesh Power Supply—All That Is Adani
Adani Group is at the forefront of scandal yet again but at the same time is backed by steadfast supporters, at the backdrop of wavering financiers. The conglomerate’s latest storm comes in the form of US bribery charges—allegations that have sent shockwaves across global financial markets.
Yet, amidst this chaos, Adani seems anything but down and out with support from heavyweights like GQG Partners and Japanese banks, even as firms like Barclays and Jefferies reconsider their ties.
A Scandal That Rocks Yet Doesn’t Topple
The US Department of Justice has charged Adani with orchestrating a $250 million bribery scheme to secure solar energy contracts by allegedly bribing Indian government officials. Serious? Absolutely. Damaging? Maybe not as much as you’d think.
Despite these grave allegations, Adani has remained defiant, labeling the claims baseless and proactively engaging to control the damage.
Interestingly, this scandal has caused a noticeable divide among Adani’s financial backers. On one side, global powerhouses like Barclays and Jefferies are hitting the brakes, wary of reputational risks. On the other, Japanese and Middle Eastern banks are standing tall, doubling down on their support.
Japanese Banks
Mizuho Financial Group, Sumitomo Mitsui Financial Group, and Mitsubishi UFJ Financial Group (MUFG) have made their stance clear—they’re sticking with Adani. Despite the swirling controversy, they view Adani’s infrastructure assets—ports, airports, and energy projects—as cash-generating, reliable, and ultimately worth the risk.
As one insider puts it, “These are not just businesses; they are lifelines of India’s economy.”
Their confidence isn’t without reason. Adani has, to date, honored all financial commitments, reassuring these lenders of its stability. Furthermore, Japanese banks, flush with record profits, seem comfortable managing legal uncertainties, confident that any fallout from the US investigation will be slow-moving.
Hence, this is no financial calculation; it’s a strategic one as aligning with a conglomerate deeply intertwined with India’s growth story, Japanese banks are not merely lending—they’re investing in the future of India’s infrastructure.
Similar confidence is echoed by Emirates NBD and other Middle Eastern lenders. Their rationale? Adani’s portfolio comprises solid, cash-positive assets. For them, the due diligence process has instilled confidence that transcends the noise of allegations. These banks see Adani’s growth potential, particularly in emerging markets, as too lucrative to pass up, scandals notwithstanding.
Barclays & Jefferies, Hesitation
Contrast this with Barclays and Jefferies, which have adopted a more cautious stance. Barclays, once a staunch supporter, has suspended new financing and gradually reduced its exposure since Hindenburg’s 2023 allegations.
Jefferies, despite its historical support, has paused any new dealings, awaiting clarity on the US charges. However, their retreat is not absolute—both firms maintain a financial stake, albeit in a reduced capacity.
Jefferies’ India arm, responsible for a $1.9 billion Adani share sale to GQG Partners, still holds Adani’s value proposition in high regard, albeit cautiously. Yet, the uncertainty around the bribery allegations has pushed them to reassess.
Why the Silence?
A curious aspect of this whole fiasco is the official silence. Despite being at the heart of a global financial controversy, none of the institutions have commented publicly.
Why?
The answer likely lies in legal prudence and reputational management. Speaking prematurely could impact ongoing investigations or legal proceedings. Moreover, with billions at stake, the banks are treading carefully, balancing their financial interests with the need to maintain credibility.
Adani Group Eyes More Mumbai Airport Land. Jackpot or Just Business as Usual?
The Adani Group, is also setting its sights on an additional 90 acres of prime land at Mumbai’s Chhatrapati Shivaji Maharaj International Airport. But this isn’t just a routine land acquisition—it’s a high-stakes tug-of-war involving legacy issues, lease negotiations, and a potential financial windfall.
A Two-Decade-Old Mystery Resurfaces
Let’s rewind to the early 2000s. The privatisation of Mumbai airport, a much-delayed process, finally gained momentum in 2006 when a GVK Group-led consortium won the bid.
Yet, amidst the celebration, one crucial detail slipped through the cracks—the land leased to Air India by the Airports Authority of India (AAI). Missing documents meant this crucial aspect of the agreement was left unresolved, with the understanding that the winning bidder and Air India would negotiate the terms later.
Fast forward to 2020, when Adani Airport Holdings Limited (AAHL) took over operations from GVK.
Now, Adani claims that this long-forgotten negotiation never happened, leaving the door open for them to stake a claim on the 90 acres of land still held by Air India Engineering Services Ltd (AIESL) and Air India Airport Services Ltd (AIASL)!
In a nutshell, Adani argues that the absence of past negotiations creates an opportunity for a fresh—and perhaps more lucrative—deal.
Adani’s Push for New Terms
Adani Airports has laid out its terms very clearly –
1) Land Surrender: AIESL and AIASL should relinquish any surplus land not actively used.
2) Market-Based Lease: They must switch from legacy rates of INR 190–250 per square metre to a staggering INR 12,000 per square metre annually.
3) Revenue Sharing: The subsidiaries should share a portion of their business revenue generated on the premises.
4) Transparency in Earnings: Actual income data should be disclosed to determine fair revenue sharing.
For AIESL alone, this would mean an annual rent of INR 400 crore, up from the current INR 6 crore—a financial leap that could threaten its very existence.
Former AIESL CEO HR Jagannathan warned that such an increase could cripple the company. “Manpower is typically the biggest cost for MROs, but under these terms, rent would overshadow all other expenses,” he said. MROs need to be near the aircraft, making relocation impractical and raising concerns about how balanced this deal really is.
Airport Operators vs. MROs
The heart of the issue lies in balancing the interests of the airport operator and the MROs. Adani’s push for higher revenue from prime airport land is understandable, given its investment in infrastructure. However, this comes at a cost to the MRO sector, which the government has long sought to protect.
India’s aviation policy has focused on keeping aircraft maintenance in the country rather than outsourcing it abroad, yet independent MROs now find themselves between a rock and a hard place. Jagannathan argues that piecemeal negotiations won’t work; instead, a cohesive strategy is needed to prevent MROs from collapsing under unsustainable costs.
Air India’s Unique Position
The story takes a turn when we consider Air India’s historical role. Former chairman Rohit Nandan highlighted that Air India operated not as a purely commercial entity but as one with significant social obligations. For years, the airline maintained loss-making routes to North America at the government’s behest, even when they accounted for 70% of its losses.
Nandan’s refusal to pay commercial airport rates back then underscores the complexity of the current situation. “Air India wasn’t just a business—it was a national service, with both hands and legs tied,” he explained. This legacy of balancing commercial viability with public service continues to haunt AIESL and AIASL as they face Adani’s aggressive terms.
AIESL and AIASL argue that any renegotiation should be grounded in the original privatisation agreement, which stipulated that terms be finalised within six months—a deadline missed by GVK. Without clear agreements from that era, the situation is legally ambiguous, leaving both parties at a stalemate.
The government’s role here is critical. As a promoter of pro-MRO policies, it must decide whether independent MROs can survive under such high rental demands or whether it needs to step in to ensure their sustainability.
Adani Group’s Mumbai Land Strategy
The Adani Group’s growing footprint in Mumbai is transforming the city’s skyline and sparking debates across multiple fronts.
At the heart of this expansion lies a prime 90-acre parcel of land surrounding Mumbai’s Chhatrapati Shivaji Maharaj International Airport. This land, currently occupied by Air India Engineering Services Ltd (AIESL) and Air India Airport Services Ltd (AIASL), is viewed as a “goldmine” by many, with its potential for both aeronautical and commercial development promising immense financial returns.
But Adani’s ambitions go far beyond just the airport.
Why This Land IS So Important?
AIESL’s land holdings near Mumbai Airport are strategically located in two major areas:
Kalina Area: Close to the runway and adjacent to the 184-acre Air India colony, which is currently under partial demolition following protests and legal challenges.
Sahar Road: Positioned at the opposite end of the runway, offering significant commercial potential given its proximity to premium locations like the Grand Hyatt and the planned connectivity with the Bandra-Kurla Complex (BKC).
According to a source familiar with airport operations, this land isn’t just valuable for aeronautical purposes—it could also host commercial ventures such as hotels, potentially fetching billions. To put this into perspective, a nearby 4-acre parcel was recently sold for around INR 800 crore (USD 100 million).
Mumbai Airport, spread across 1,850 acres, is allowed under the 2006 privatisation agreement to commercially develop 10% of its total area. This provision is intended to generate non-aeronautical revenue that can subsidise passenger costs, particularly the Airport Development Fee (ADF) embedded in airfare. Commercial projects like hotels, eateries, and retail spaces are envisioned to ease the financial burden on passengers while boosting airport revenues.
Adani’s Expanding Mumbai Footprint
The airport land isn’t the only jewel in Adani’s Mumbai crown. The conglomerate recently won the rights to redevelop Dharavi, one of Asia’s largest slums, spanning 620 acres—approximately 60% the size of New York’s Central Park.
This ambitious USD 3 billion project aims to transform Dharavi into a modern residential and commercial hub, relocating over 700,000 residents from shanties into new housing.
When combined, Adani’s control over 2,500 acres across Mumbai, from the airport to Dharavi, positions the group as a dominant force in the city’s urban redevelopment arena. This dual strategy of developing high-value commercial and residential projects cements Adani’s role in shaping not only the conglomerates hold but also Mumbai’s future.
No Power
Even as the bribery scandal involving Andhra Pradesh’s political leaders surface, Adani Green Energy Ltd (AGEL) is facing criticism for delays in its mega solar power project in Andhra Pradesh.
Originally slated to supply 6,000 MW of power by September 2025 under a Power Purchase Agreement (PPA) with the Solar Energy Corporation of India (SECI), AGEL is now behind schedule, with only 2,000 MW expected by January 2026.
Despite the delays, AGEL is profiting by selling power from the same project on power exchanges at INR 3.5 per unit, 40% higher than the state-contracted tariff of INR 2.42. This has sparked controversy, with critics accusing the company of prioritising profits over contractual obligations.
AGEL, however, cites incomplete transmission infrastructure as the reason for the delay, asserting it has SECI’s approval to sell surplus power on the open market until the grid is fully ready.
An AGEL spokesperson explained, “Electricity cannot be stored, and with the generation plant ready, we are permitted to sell power on the grid. We remain fully committed to supplying energy under the PPA once the transmission system is operational.”
The Last Bit
Adani’s simultaneous involvement in Mumbai’s real estate and India’s renewable energy sectors among others shows its ambition to dominate key sectors.
The airport land deal offers significant revenue potential, but it also raises questions about the future of AIESL and AIASL, both of which face pressure to either vacate or pay steep market-based lease rates.
Meanwhile, the delays in AGEL’s power project shows the broader risks of rapid expansion, particularly when logistical and regulatory challenges arise. While the company is leveraging loopholes to maintain profitability, it risks damaging its reputation with both state governments and public stakeholders.
At the same time, while the bribery allegations are serious, the conglomerate’s ability to retain heavyweight financial backing speaks volumes. Japanese and Middle Eastern banks are betting on the conglomerate’s long-term viability, while others like Barclays and Jefferies are more circumspect.
For now, the Adani Group is walking a tightrope—balancing scandal and support, risk and reward. The coming months will determine whether this balancing act leads to a soft landing or a hard fall. One thing is certain- Adani is neither down nor out. Not yet.