Adani Group Suspends Work on Rs 34,900 Crore Petrochemical Project in Mundra

As concerns over its finances continue, the Adani group has suspended work on a Rs 34,900 crore petrochemichal project in Mundra, Gujarat This decision comes two months after US-based short-seller Hindenburg Research published a report accusing the Adani group of large-scale accounting fraud and stock manipulation, leading to serious concerns and a free fall in Adani group companies’ share prices. The Gautam Adani-led conglomerate has denied these allegations.

According to PTI, Adani Enterprises Ltd had in 2021 incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd, to set up a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone land in Kutch district. The group has sent emails to vendors and suppliers, telling them to “suspend all activities” on an immediate basis “till further notice”.

The unit was to have a poly-vinyl-chloride (PVC) production capacity of 2,000 kilo tonne per annum requiring 3.1 million tonne per annum of coal that was to be imported from Australia, Russia and other countries. PVC demand in India has been rising.

The management, according to PTI, is “re-evaluating various project/s being implemented at group level in different business verticals. Based on future cashflow and finance, some of the project/s are being re-evaluated for its continuation and revision in timeline”.

An AEL spokesperson told PTI, “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 cashflows, and our business plan is fully funded. We remain focused on executing our previously outlined strategy to create value for our stakeholders.”

This seems to be part of the Adani group’s steps to try and come out of the crisis it has found itself in since January 24, with about $140 billion dollars of the group’s market value disappearing. In order to allay investor concerns, the group is trying to repay some of its loans.

Previously, the group has cancelled a Rs 7,000 crore coal plant purchase and also taken back its bid for stake in power trader PTC. Reports also said the group is selling its stake in Ambuja Cement – and it was revealed that this particular company is actually owned by Vinod Adani, Gautam’s brother.

After the publication of the Hindenburg report, several investigations have raised further questions about the group’s functioning. The matter has also been raised repeatedly in parliament by opposition parties, who have asked why investigative agencies are not probing the company.