NEW DELHI: Adani Group has suspended work on a Rs 34,900 crore petrochemical project at Mundra in Gujarat as it focuses on resources to shore up operations and address investor concerns following a damning report from a US-based short seller, sources said.
The flagship of the group Adani Enterprises Ltd (AEL) had incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd, in 2021 for the establishment of a new coal-to-PVC processing plant in Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
But after Hindenburg Research’s Jan. 24 report alleging accounting fraud, stock manipulation and other corporate governance lapses cut about $140 billion from the market value of Gautam Adani’s empire , the apple group at the airport hopes to recover and calm nervous investors and lenders with a return strategy.
The return strategy is based on addressing investors’ debt concerns by repaying some loans, consolidating deals and pushing back on allegations.
The group denied all the allegations made by Hindenburg. Within this framework, projects are reassessed based on cash flow and available financing.
And among the projects that the group has decided not to pursue for the moment, there is the Green PVC project of 1 million tons per year, indicated two sources familiar with the matter.
The group sent letters to vendors and suppliers to “suspend all activities” on an immediate basis.
In the letters, seen by PTI, the group asked them to “suspend all scope of work activities and performance of all obligations” for Mundra Petrochem Ltd’s Green PVC project “until further notice” .
This is the next “unforeseen scenario”. Management, he said, “was reassessing various projects being implemented at the group level in different business areas. Based on future cash flows and finances, some projects are reassessed for their continuation. and their revision in the calendar.
Contacted for comment, a spokesperson for the group said AEL will assess the status of growth projects in the primary industry vertical over the coming months.
“The balance sheet of each of the independent companies in our portfolio is very strong. We have industry-leading project development and execution capabilities, strong corporate governance, secure assets, strong cash flow and our business plan is fully funded. We remain focused on executing our previously outlined strategy to create value for our stakeholders,” the spokesperson said.
“AEL will assess the status of growth projects in the primary industry vertical over the coming months.”
The unit was to have a polyvinyl chloride (PVC) production capacity of 2,000 KTPA (kilo tonne per year) requiring 3.1 million tonnes per year (MTPA) of coal which was to be imported from Australia, Russia and other countries.
PVC is the third most produced synthetic plastic polymer in the world. It finds many applications – from flooring to the manufacture of sewer pipes and other piping applications, in the insulation of electrical wires, packaging and the manufacture of aprons, etc.
The Adani Group had planned the project as demand for PVC in India, at around 3.5 MTPA, was growing at the rate of 7% year-on-year. With domestic PVC production near stagnant at 1.4 million tonnes, India depends on imports to keep pace with demand.
The Hindenburg report had alleged “brazen stock manipulation and accounting fraud” and the use of offshore shell companies to inflate stock prices. The group denied all of Hindenburg’s allegations, calling them “malicious”, “baseless” and a “calculated attack on India”.
As part of the comeback strategy, the group canceled the Rs 7,000 crore coal-fired power plant purchase as well as plans to bid for a stake in power trader PTC to cut down on expenses. He repaid part of his debt and prepaid part of the funds raised by promising the promoter’s participation in the companies of the group.
The flagship of the group Adani Enterprises Ltd (AEL) had incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd, in 2021 for the establishment of a new coal-to-PVC processing plant in Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
But after Hindenburg Research’s Jan. 24 report alleging accounting fraud, stock manipulation and other corporate governance lapses cut about $140 billion from the market value of Gautam Adani’s empire , the apple group at the airport hopes to recover and calm nervous investors and lenders with a return strategy.
The return strategy is based on addressing investors’ debt concerns by repaying some loans, consolidating deals and pushing back on allegations.
The group denied all the allegations made by Hindenburg. Within this framework, projects are reassessed based on cash flow and available financing.
And among the projects that the group has decided not to pursue for the moment, there is the Green PVC project of 1 million tons per year, indicated two sources familiar with the matter.
The group sent letters to vendors and suppliers to “suspend all activities” on an immediate basis.
In the letters, seen by PTI, the group asked them to “suspend all scope of work activities and performance of all obligations” for Mundra Petrochem Ltd’s Green PVC project “until further notice” .
This is the next “unforeseen scenario”. Management, he said, “was reassessing various projects being implemented at the group level in different business areas. Based on future cash flows and finances, some projects are reassessed for their continuation. and their revision in the calendar.
Contacted for comment, a spokesperson for the group said AEL will assess the status of growth projects in the primary industry vertical over the coming months.
“The balance sheet of each of the independent companies in our portfolio is very strong. We have industry-leading project development and execution capabilities, strong corporate governance, secure assets, strong cash flow and our business plan is fully funded. We remain focused on executing our previously outlined strategy to create value for our stakeholders,” the spokesperson said.
“AEL will assess the status of growth projects in the primary industry vertical over the coming months.”
The unit was to have a polyvinyl chloride (PVC) production capacity of 2,000 KTPA (kilo tonne per year) requiring 3.1 million tonnes per year (MTPA) of coal which was to be imported from Australia, Russia and other countries.
PVC is the third most produced synthetic plastic polymer in the world. It finds many applications – from flooring to the manufacture of sewer pipes and other piping applications, in the insulation of electrical wires, packaging and the manufacture of aprons, etc.
The Adani Group had planned the project as demand for PVC in India, at around 3.5 MTPA, was growing at the rate of 7% year-on-year. With domestic PVC production near stagnant at 1.4 million tonnes, India depends on imports to keep pace with demand.
The Hindenburg report had alleged “brazen stock manipulation and accounting fraud” and the use of offshore shell companies to inflate stock prices. The group denied all of Hindenburg’s allegations, calling them “malicious”, “baseless” and a “calculated attack on India”.
As part of the comeback strategy, the group canceled the Rs 7,000 crore coal-fired power plant purchase as well as plans to bid for a stake in power trader PTC to cut down on expenses. He repaid part of his debt and prepaid part of the funds raised by promising the promoter’s participation in the companies of the group.
