Hindenburg fall-out: Adani Group suspends work on Rs 34,900 cr petro-chem venture

Adani Group has suspended work on a Rs 34,900-crore petrochemical venture at Mundra in Gujarat because it focuses on sources to consolidate operations and tackle investor considerations following a damning report by a US-based quick vendor, sources stated.

The group’s flagship Adani Enterprises Ltd (AEL) had in 2021 included a wholly-owned subsidiary, Mundra Petrochem Ltd for organising a greenfield coal-to-PVC plant at Adani Ports and Particular Financial Zone (APSEZ) land in Kutch district of Gujarat.

However after Hindenburg Research’s January 24 report alleging accounting fraud, inventory manipulations and different company governance lapses chopped off about $140 billion from the market worth of Gautam Adani’s empire, the apples-to-airport group is hoping to claw again and calm jittery traders and lenders by means of a comeback technique.

Investor considerations

The comeback technique relies on addressing investor considerations round debt by repaying some loans, consolidating operations, and preventing off allegations.

The group has denied all allegations levelled by Hindenburg. As a part of this, initiatives are being re-evaluated primarily based on cashflow and finance out there.

And of the initiatives the group has determined to not pursue in the meanwhile is the 1 million tonne each year Inexperienced PVC venture, two sources with information of the matter stated.

The group has shot off mails to distributors and suppliers to “droop all actions” on fast foundation.

Within the mails, seen by PTI, the group has requested them to “droop all actions of the scope of labor and efficiency of all obligations” for Mundra Petrochem Ltd’s Inexperienced PVC venture “until additional discover.”

That is following the “unexpected state of affairs”. The administration, it stated, was “re-evaluating varied venture/s being carried out at group degree in several  enterprise verticals. Based mostly on future cashflow and finance, a few of the venture/s are being re-evaluated for its continuation and revision in timeline.”

Watch: Hindenburg Impact: Here’s how much Gautam Adani lost

Reached for feedback, a gaggle spokesperson stated AEL can be evaluating the standing of development initiatives in major {industry} vertical over the approaching months.

“The stability sheet of every of our unbiased portfolio firms may be very sturdy. We have now industry-leading venture growth and execution capabilities, sturdy company governance, safe belongings, sturdy cashflows, and our marketing strategy is absolutely funded. We stay centered on executing our beforehand outlined technique to create worth for our stakeholders,” the spokesperson stated.

“AEL can be evaluating the standing of development initiatives within the major {industry} vertical over the approaching months”.

PVC unit

The unit was to have a poly-vinyl-chloride (PVC) manufacturing capability of two,000 KTPA (kilo tonne each year) requiring 3.1 million tonne each year (MTPA) of coal that was to be imported from Australia, Russia and different nations.

PVC is the world’s third-most extensively produced artificial polymer of plastic. It finds broad purposes – from flooring, to creating sewage pipes and different pipe purposes, in insulation on electrical wires, packaging and manufacture of aprons and so on.

Adani Group had deliberate the venture as PVC demand in India at round 3.5 MTPA was rising on the charge of seven per cent year-on-year. With close to stagnant home manufacturing of PVC at 1.4 million tonne, India depends on imports to maintain tempo with the demand.

The Hindenburg report had alleged “brazen inventory manipulation and accounting fraud” and use of offshore shell firms to inflate inventory costs. The group has denied all Hindenburg allegations, calling them “malicious”, “baseless” and a “calculated assault on India”.

As a part of the comeback technique, the group has cancelled a Rs 7,000-crore coal plant buy in addition to shelved plans to bid for stake in energy dealer PTC to preserve bills. It has repaid some debt and pre-paid a few of the funds raised by pledging promoter stake in group firms.

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