Hindenburg fallout: Adani Group suspends work on Rs 34,900 cr petchem project

NEW DELHI: Adani Corporation Sources say it has suspended work on a Rs 34,900 crore petrochemical project at Mundra in Gujarat as it focuses resources on consolidating operations and addressing investor concerns. following a damaging report by a US-based short seller.
The leader of the group Adani Enterprises Ltd (AEL) in 2021 established a wholly owned subsidiary, Mundra Petrochem Ltd to set up a coal to PVC plant at the green mine in Adani Port and Special Economic Zone (APSEZ) in Kutch district of Gujarat.
But following a January 24 report from Hindenburg Research alleging accounting fraud, stock manipulation and other corporate governance lapses, the company lost about $140 billion in market value. Gautam AdaniThis is Apple’s empire, the airport apple corporation is hoping to get it back and appease worried investors and lenders through a return strategy.
The return strategy is based on addressing investors’ concerns about debt by paying off some loans, consolidating operations, and fighting the charges.
The group has denied all the allegations made by Hindenburg. As part of this, projects are being reassessed based on existing cash flow and financing.
And among the projects that the group has decided not to pursue for the time being is the 1 million tons per year Green PVC project, two sources with knowledge of the matter said.
The team sent letters to vendors and suppliers to “suspend all operations” immediately.
In the letter seen by PTI, the group asked them to “suspend all activities within the scope of work and fulfill all obligations” for Mundra Petrochem Ltd’s Green PVC project “until further notice. “.
Here is the following “unforeseen scenario”. Management, it said, is “reassessing various projects being undertaken at a team level in different lines of business. Based on future cash flow and financing, several projects are under development. be re-evaluated for continuation and promptly revised.”
Reached for comment, a group spokesman said AEL will assess the status of growth projects in the vertical in the coming months.
“The balance sheets of each company in our independent portfolio are strong. We have industry-leading project development and execution capabilities, strong corporate governance, secure assets. secure, strong cash flow and our business plan is fully funded. We remain focused on executing on our previously outlined strategy to create value for our stakeholders.” said the spokesman.
“AEL will assess the status of growth projects in the main vertical in the coming months.”
The plant has a poly-vinyl-chloride (PVC) production capacity of 2,000 KTPA (kilo tons per year) requiring 3.1 million tons per year (MTPA) of coal imported from Australia, Russia and other countries.
PVC is the third most widely produced synthetic plastic in the world. It has a wide range of applications – from flooring, sewage piping and other piping applications, electrical wiring insulation, packaging and apron manufacturing, etc.
Adani Group planned the project as PVC demand in India at around 3.5 MTPA is growing at 7% annual rate. With domestic PVC production almost stagnating at 1.4 million tonnes, India depends on imports to meet demand.
The Hindenburg report accused “blatant stock manipulation and accounting fraud” and used offshore shell companies to inflate stock prices. The group has denied all of Hindenburg’s allegations, calling them “malicious”, “baseless” and a “calculated attack on India”.
As part of its comeback strategy, the group canceled the purchase of a coal plant worth Rs7,000 crore as well as shelved plans to buy a stake in power trading company PTC to save costs. It has repaid some debts and prepaid some of the financing it raised by pledging promoter shares in group companies.


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