Adani Group hopes to get financial closure for Rs 34,900 cr petchem project in next six months

Adani Group hopes to get the financial closure for Rs 34,900 crore petrochemical project in Mundra in Gujarat in the next six months.

Adani Enterprises Ltd AEL had incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd, in 2021, for setting up a greenfield coal-to-PVC plant in Adani Ports and Special Economic Zone APSEZ in Kutch district of Gujarat.

After US-based Hindenburg Research reported on January 24 alleging accounting fraud, stock manipulations and other corporate governance lapses, the ports-to-power conglomerate has been going easy on projects that need heavy investments, according to the January 24 report by the US-based Hindenburg Research.

The financial institutions are considering the closure of the Green PVC project of M S Mundra Petrochemicals Limited MPL and it is in their active consideration. The management has decided to continue with engineering design and other activities, including financial closure in an accelerated manner due to recent market developments, said an Adani Group spokesman.

ALSO READ: The Hindenburg-hit Adani Group suspends work on the Rs 34,900 cr petchem project in Gujarat.

The major equipment procurement and site construction activities were put on hold until the above decision was made. We are hopeful to get financial closure for the project in the next six months, after which full-fledged procurement and construction activities at site will begin. The Adani Group spokesman said that they were committed to completing the project in an expeditious manner in order to meet the original timelines.

The unit was to have a polyvinyl chloride PVC production capacity of 2,000 KTPA kilo tonne per annum requiring 3.1 million tonne per annum of coal imported from Australia, Russia and other countries.

PVC is the 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 a rate of 7 per cent year-on-year. India is dependent on imports to keep pace with the demand, due to the stagnant domestic production of PVC at 1.4 million tonne.

The Hindenburg report had alleged stock manipulation and accounting fraud and use of offshore shell companies to inflate stock prices. The group has denied all of the Hindenburg allegations, calling them'malicious' 'baseless' and a 'calculated attack on India. As part of the comeback strategy, the group has cancelled a 7,000 crore coal plant purchase as well as plans to bid for stake in power trader PTC to conserve expenses. It has paid some debt and pre-paid some of the money raised by pledging promoter stake in group companies.