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, reported PTI.
With the company trying to make a comeback for the time being the 1 million tonne per annum Green PVC project is one of the projects that will be suspended till further notice, reported PTI citing two sources with knowledge of the matter.
Mundra Petrochem Limited
According to the report by PTI, Adani group has sent mails to vendors and suppliers to "suspend all activities" on immediate basis. According to the report the group has asked them to "suspend all activities of the scope of work and performance of all obligations" for Mundra Petrochem Ltd Green PVC project "till further notice."
The group's flagship Adani Enterprises Limited in 2021 had incorporated a wholly-owned subsidiary, Mundra Petrochem Limited for setting up a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
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.
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.
Adani Groups comeback plan
After US-based shortseller Hindenburg Research released its report on January 24 alleging accounting fraud, stock manipulations and other corporate governance lapses the group lost close to $ 140 billion from the market value. The company is trying to calm jittery investors and lenders through a comeback strategy that includes addressing 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 cash flow and finance available.
As part of the comeback strategy, the group has also canceled a ₹ 7,000 crore coal plant purchase as well as shelved plans to bid for stake in power trader PTC to conserve expenses. It has repaid some debt and pre-paid some of the finances raised by pledging promoter stake in group companies.
A spokesperson of Adani Enterprises told the PTI that the company will be evaluating the status of growth projects in primary industry vertical over the coming months.
The spokesperson said, "The balance sheet of each of our independent portfolio companies is very strong. We have industry-leading project development and execution capabilities, strong corporate governance, secure assets, strong cash flows, and our business plan is fully funded. We remain focused on executing our previously outlined strategy to create value for our stakeholders."
With inputs from agencies
