group leader Adani Enterprises Ltd (AEL) incorporated a wholly owned subsidiary, Mundra Petrochem Ltd, to set up a greenfield coal-to-PVC plant in 2021. Adani Port and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
But after a January 24 report by Hindenburg Research alleging accounting fraud, stock manipulation and other corporate governance lapses whittled nearly $140 billion off the market value of Gautam Adani’s empire, the apples-to-airport conglomerate has troubled investors and lenders to back off and hoping to calm down. Through the return strategy.
The turnaround strategy is based on allaying investor concerns around debt by paying down some debt, consolidating operations and fighting off charges.
The group denied all allegations made by Hindenburg. As part of this, projects are being re-evaluated on the basis of cash flows and available finance.
Two sources with knowledge of the matter said one of the projects the group has decided not to proceed with for the time being is a 1 million tonne per year green PVC project.
The group has mailed vendors and suppliers to “suspend all activities” on an immediate basis.
In the mail seen by PTI, the group has asked them to suspend all activities of the scope of work and performance of all obligations for Mundra Petrochem Ltd’s Green PVC project “until further notice”.
This is the following “unexpected scenario”. Management said, “was re-appraising various projects being implemented at the group level in different business verticals. Based on future cash flows and finance, some projects are being re-appraised for its continuation and revision of timelines.” “
Reached for comments, a group spokesperson said AEL would evaluate the status of development projects in the primary industry in the coming months.
“Each of our independent portfolio companies has very strong balance sheets. 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 We are focused on executing our previously outlined strategy to create value for our stakeholders,” the spokesperson said.
“AEL to evaluate status of development projects in primary industry verticals in coming months”.
The unit was to have a poly-vinyl-chloride (PVC) production capacity of 2,000 ktpa (kilo tonnes per annum), which would require 3.1 million tonnes per annum (MTPA) of coal, which would be imported from Australia, Russia and other countries. had to go.
PVC plastic is the world’s third most widely produced synthetic polymer. It has a wide range of uses – from flooring to sewage pipes and other pipe applications, insulation on electrical cables, packaging and manufacturing aprons, etc.
Adani Group had planned the project as PVC demand in India of around 3.5 MTPA was growing at 7 per cent year-on-year. With a nearly stagnant domestic production of PVC at 1.4 million tonnes, India is dependent on imports to keep pace with demand.
The Hindenburg Report alleged “brazen stock manipulation and accounting fraud” and the use of offshore shell companies to inflate stock prices. The group has denied all of Hindenburg’s allegations, calling them “malicious”, “baseless” and a “planned attack on India”.
As part of the turnaround strategy, the group has scrapped the Rs 7,000-crore coal plant purchase and postponed plans to bid for stake in power trader PTC to save on expenses. It has repaid some debt raised by pledging promoter’s stake in group companies and prepaid some finance.