Hindenburg Effect: Adani Group halts work on Rs 34,900 crore petrochemical project
The group’s flagship company Adani Enterprises Limited (AEL) had formed a wholly owned subsidiary Mundra Petrochem Limited in 2021 to set up a new coal-to-PVC manufacturing plant. The plant was to be set up on Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
New Delhi. The Adani Group has stopped work on its Rs 34,900 crore petrochemical project at Mundra in Gujarat. The group is focusing resources on consolidating its operations and addressing investor concerns following losses from US investment company Hindenburg’s report. The group’s flagship company Adani Enterprises Limited (AEL) had formed a wholly owned subsidiary Mundra Petrochem Limited in 2021 to set up a new coal-to-PVC manufacturing plant. The plant was to be set up on Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
Adani Group’s valuation has come down by about US$ 140 billion after Hindenburg Research’s January 24 report. As such, the group is currently focusing on paying off some debt, consolidating operations and addressing investor concerns. The group denied all of Hindenburg’s allegations. Two sources with knowledge of the matter said that the projects on which the group has decided not to proceed for the time being include a green PVC project with a capacity of one million tonnes per annum. The group has sent an email to vendors and suppliers asking them to stop all activities immediately. In this, the group has asked vendors and suppliers to suspend all activities and all obligations for the Green PVC project of Mundra Petrochem Limited until further notice.
The group said, various projects being implemented at the group level in different business verticals are being re-evaluated. Based on future cash flows and finance, some projects are being re-evaluated for continuation and timelines are being revised. When contacted for comment in this regard, a spokesperson of the group said that AEL will 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, he said. We have leading project development and execution capabilities, strong corporate governance, secure assets, strong cash flows, and our business plan is fully funded. The spokesperson said that we are focused on creating better value for our stakeholders.
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