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 consolidate operations and address investor concerns following a damaging report by an established short seller in the United States, sources said.
The flagship of the group Adani Enterprises Ltd (AEL) had incorporated in 2021 a wholly owned subsidiary, Mundra Petrochem Ltd for the establishment of a greenfield coal to PVC plant in Adani Ports and Land Special Economic Zone (APSEZ) in Kutch district of Gujarat.
But after Hindenburg Research’s Jan. 24 report of alleged accounting fraud, stock manipulation and other corporate governance errors slashed about $140 billion from the market value of Gautam Adani’s empire, the apples-to -airport hopes to recover and calm nervous investors and lenders through a return strategy.
The payback strategy is based on addressing investors’ debt concerns by repaying some loans, consolidating operations and dismissing the charges.
The group has denied all of Hindenburg’s allegations. As part of this, projects are reevaluated based on cash flow and available funding.
And among the projects the group has decided not to pursue for the time being is the 1-million-ton-per-year Green PVC project, two sources familiar with the matter said.
The group has sent emails to vendors and suppliers to “suspend all activity” on an immediate basis.
In the emails, seen by PTI, the group asked them to “suspend all scope of work activities and the fulfillment of all obligations” for Mundra Petrochem Ltd’s Green PVC project “until further notice”.
This is the following “unexpected scenario”. Management, he said, was “reevaluating various projects being implemented group-wide across different business verticals. Based on future cash flow and finance, some of the projects are being reevaluated for their continuation and reviewed in the timeline.” .”
Reached for comments, a spokesman for the group said AEL would assess the status of growth plans in the primary vertical sector in the coming months.
“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, safe 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,” the spokesperson said.
“AEL will assess the status of growth plans in the primary vertical sector in the coming months.”
The unit was to have a polyvinyl chloride (PVC) production capacity of 2,000 KTPA (kilotons per year) requiring 3.1 million tonnes per year (MTPA) of coal which was to be imported from Australia, Russia and others villages.
PVC is the third most produced synthetic plastic polymer in the world. It finds wide applications – from flooring, making sewer pipe and other pipe applications, in electrical wire insulation, packaging and apron manufacturing, etc.
Adani Group planned the project as the demand for PVC in India at around 3.5 MTPA was growing at the rate of 7% year on year. With domestic production of PVC nearly stagnating at 1.4 million tonnes, India depends on imports to keep up with demand.
The Hindenburg Report had exposed “blatant 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 “harmful”, “baseless” and a “calculated attack on India”.
As part of the comeback strategy, the group canceled its Rs 7,000 crore coal-fired power plant purchase and shelved plans to bid for a stake in energy trader PTC to save on expenses. It repaid part of the debt and advanced part of the finances raised by pledging the promoter’s stake in the group companies.
The flagship of the group Adani Enterprises Ltd (AEL) had incorporated in 2021 a wholly owned subsidiary, Mundra Petrochem Ltd for the establishment of a greenfield coal to PVC plant in Adani Ports and Land Special Economic Zone (APSEZ) in Kutch district of Gujarat.
But after Hindenburg Research’s Jan. 24 report of alleged accounting fraud, stock manipulation and other corporate governance errors slashed about $140 billion from the market value of Gautam Adani’s empire, the apples-to -airport hopes to recover and calm nervous investors and lenders through a return strategy.
The payback strategy is based on addressing investors’ debt concerns by repaying some loans, consolidating operations and dismissing the charges.
The group has denied all of Hindenburg’s allegations. As part of this, projects are reevaluated based on cash flow and available funding.
And among the projects the group has decided not to pursue for the time being is the 1-million-ton-per-year Green PVC project, two sources familiar with the matter said.
The group has sent emails to vendors and suppliers to “suspend all activity” on an immediate basis.
In the emails, seen by PTI, the group asked them to “suspend all scope of work activities and the fulfillment of all obligations” for Mundra Petrochem Ltd’s Green PVC project “until further notice”.
This is the following “unexpected scenario”. Management, he said, was “reevaluating various projects being implemented group-wide across different business verticals. Based on future cash flow and finance, some of the projects are being reevaluated for their continuation and reviewed in the timeline.” .”
Reached for comments, a spokesman for the group said AEL would assess the status of growth plans in the primary vertical sector in the coming months.
“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, safe 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,” the spokesperson said.
“AEL will assess the status of growth plans in the primary vertical sector in the coming months.”
The unit was to have a polyvinyl chloride (PVC) production capacity of 2,000 KTPA (kilotons per year) requiring 3.1 million tonnes per year (MTPA) of coal which was to be imported from Australia, Russia and others villages.
PVC is the third most produced synthetic plastic polymer in the world. It finds wide applications – from flooring, making sewer pipe and other pipe applications, in electrical wire insulation, packaging and apron manufacturing, etc.
Adani Group planned the project as the demand for PVC in India at around 3.5 MTPA was growing at the rate of 7% year on year. With domestic production of PVC nearly stagnating at 1.4 million tonnes, India depends on imports to keep up with demand.
The Hindenburg Report had exposed “blatant 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 “harmful”, “baseless” and a “calculated attack on India”.
As part of the comeback strategy, the group canceled its Rs 7,000 crore coal-fired power plant purchase and shelved plans to bid for a stake in energy trader PTC to save on expenses. It repaid part of the debt and advanced part of the finances raised by pledging the promoter’s stake in the group companies.
