The present work focuses on grid adaptation on the structured grids for axisymmetric hypersonic flow around FIRE-II re-entry capsule. A compressible form of Euler equations are solved under perfect gas flow and reactive gas flow assumptions. An entropy-based adaptive indicator is used to identify the regions of spurious entropy generation due to the numerical discretization and the regions of shock. The grid is adapted in these regions and the adapted grids remain structured. The results showed that adapted grids having only around one-seventh the number of grid points on a uniformly refined fine grid are able to produce results that are comparable to the fine grid results. This consequently reduces the computational cost considerably. Additionally, locations of chemically reactive zones are located using the present adaptive indicator.