'Hope to obtain financial closure in next 6 months': Adani Group on suspending work on Rs 34,900-cr Mundra project

Adani Group on Monday said it is hopeful of obtaining financial closure for Rs 34,900-crore petrochemical project at Mundra in Gujarat in the next six months.

The conglomerate was responding to news reports about it suspending work as it focuses on consolidating operations and addressing investor concerns after the Hindenburg report.

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

But after US-based Hindenburg Research's January 24 report alleging accounting fraud, stock manipulations and other corporate governance lapses chopped off about $140 billion from the market value of Gautam Adani's empire, the ports-to-power conglomerate has been going easy on projects that need heavy investments.

"The financial closure of the Green PVC project of M/S Mundra Petrochemicals Limited ( MPL) is pending with the financial institutions and it is in their active consideration. Due to recent market developments, the management has decided to continue with the engineering design and other activities including financial closure in an accelerated mode," said an Adani Group spokesperson.

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"Pending the above it has been decided to keep the major equipment procurement and site construction activities on hold. We are hopeful to obtain financial closure for the project in next six months post which full-fledged procurement and construction activities at site will commence. We are committed to completing the project in an expeditious manner so as to meet the original timelines," the Adani Group spokesperson added.

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.

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

The Hindenburg report had alleged ''brazen stock manipulation and accounting fraud'' and use of offshore shell companies to inflate stock prices. The group has denied all Hindenburg allegations, calling them ''malicious'', ''baseless'' and a ''calculated attack on India''.

As part of the comeback strategy, the group has cancelled a Rs 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.

With inputs from PTI