Adani Group Chairman Gautam Adani.
| Photo Credit: Reuters
Adani Group has suspended work on a ₹34,900 crore petrochemical project at Mundra in Gujarat because it focuses on assets to consolidate operations and deal with investor issues following a damning report by a U.S.-based quick vendor, sources stated.
The group’s flagship Adani Enterprises Ltd (AEL) had in 2021 integrated a wholly-owned subsidiary, Mundra Petrochem Ltd for establishing a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
But after Hindenburg Research’s January 24 report alleging accounting fraud, inventory manipulations and different company governance lapses chopped off about $140 billion from the market worth of Gautam Adani’s empire, the apples-to-airport group is hoping to claw again and calm jittery buyers and lenders via a comeback technique.
The comeback technique is predicated on addressing investor issues round debt by repaying some loans, consolidating operations, and combating off allegations.
The group has denied all allegations levelled by Hindenburg. As a part of this, tasks are being re-evaluated primarily based on cashflow and finance out there.
And of the tasks the group has determined to not pursue in the interim is the 1 million tonne each year Green PVC project, two sources with information of the matter stated.
The group has shot off mails to distributors and suppliers to “suspend all activities” on speedy foundation.
In the mails, seen by PTI, the group has requested them to “suspend all activities of the scope of work and performance of all obligations” for Mundra Petrochem Ltd’s Green PVC project “till further notice.” This is the next “unforeseen scenario”.
The administration, it stated, was “re-evaluating various project/s being implemented at group level in different business verticals. Based on future cash flow and finance, some of the project/s are being re-evaluated for its continuation and revision in timeline.”
Reached for feedback, a gaggle spokesperson stated AEL will likely be evaluating the standing of progress tasks in major trade vertical over the approaching 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, 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,” the spokesperson stated.
“AEL will be evaluating the status of growth projects in the primary industry vertical over the coming months”.
The unit was to have a poly-vinyl-chloride (PVC) manufacturing capability of two,000 KTPA (kilo tonne each year) requiring 3.1 million tonne each year (MTPA) of coal that was to be imported from Australia, Russia and different international locations.
PVC is the world’s third-most broadly produced artificial polymer of plastic. It finds large purposes — from flooring, to creating sewage pipes and different pipe purposes, in insulation on electrical wires, packaging and manufacture of aprons and many others.
Adani Group had deliberate the project as PVC demand in India at round 3.5 MTPA was rising on the fee of seven% year-on-year. With near-stagnant home manufacturing of PVC at 1.4 million tonne, India depends on imports to maintain tempo with the demand.
The Hindenburg report had alleged “brazen stock manipulation and accounting fraud” and use of offshore shell firms to inflate inventory costs. The group has denied all Hindenburg allegations, calling them “malicious”, “baseless”, and a “calculated attack on India”.
As a part of the comeback technique, the group has cancelled a ₹7,000 crore coal plant buy in addition to shelved plans to bid for stake in energy dealer PTC to preserve bills. It has repaid some debt and pre-paid among the funds raised by pledging promoter stake in group firms.
