Adani Group’s Rs 34,900 cr petchem project suspended

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 damning report by a US-based short seller, sources said.

The group’s flagship 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 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 apples-to-airport group is hoping to claw back and calm jittery investors and lenders through a comeback strategy.

The comeback strategy is based on addressing investor concerns around debt by repaying some loans, consolidating operations, and fighting off allegations.

The group has denied all allegations levelled by Hindenburg. As part of this, projects are being re-evaluated based on cashflow and finance available.

And of the projects the group has decided not to pursue for the time being is the 1 million tonne per annum Green PVC project, two sources with knowledge of the matter said.

The group has shot off mails to vendors and suppliers to “suspend all activities” on immediate basis.

In the mails, 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 “till further notice. This is the following “unforeseen scenario”. The management, it said, 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 the timeline.”

Reached for comments, a group spokesperson said AEL will be evaluating the status of growth projects in the primary industry verticals over 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, secure assets, and 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 be evaluating the status of growth projects in the primary industry vertical over the coming months”.