Adani Group has suspended work on a ₹34,900 crore petrochemical project at Mundra in Gujarat as it focuses on resources to consolidate operations and address investor concerns following a damning report by a US-based short seller.
The group’s flagship Adani Enterprises Ltd (AEL), had in 2021, incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd for setting up a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat. However, after Hindenburg Research’s report (January 24) alleging accounting fraud, stock manipulations and other corporate governance lapses, a substantial USD 140 was chipped away from the conglomerate’s market value.
The group has denied all allegations levelled by Hindenburg. Meanwhile, the Group’s comeback strategy has been restructured to address investor concerns around debt by repaying some loans, consolidating operations, and fighting off allegations. As part of this, projects are being re-evaluated based on cashflow and finance available, shared top-placed sources.
And of the projects the group has decided not to pursue for the time being is the 1 million tonne per annum Green PVC project, two sources with knowledge of the matter said. As part of the comeback strategy, the group earlier cancelled a ₹7,000 crore coal plant purchase as well as shelved plans to bid for stake in power trader PTC to conserve expenses.
The group has shot off mails to vendors and suppliers to “suspend all activities” on immediate basis.
This is the following “unforeseen scenario”. The management, it said, was “re-evaluating various project/s being implemented at group level in different business verticals. Based on future cashflow and finance, some of the project/s are being re-evaluated for its continuation and revision in timeline.”
Reached for comments, a group spokesperson said AEL will be evaluating the status of growth projects in primary industry vertical over the coming months.
The unit was to have a poly-vinyl-chloride (PVC) production capacity of 2,000 KTPA (kilo tonne per annum) requiring 3.1 million tonne per annum (MTPA) of coal that was to be imported from Australia, Russia and other countries.
PVC is the world’s third-most widely produced synthetic polymer of plastic. It finds wide applications – from flooring, to making sewage pipes and other pipe applications, in insulation on electrical wires, packaging and manufacture of aprons etc.
Adani Group had planned the project as PVC demand in India at around 3.5 MTPA was growing at the rate of 7 per cent year-on-year. With near stagnant domestic production of PVC at 1.4 million tonnes, India is dependent on imports to keep pace with the demand.
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