Adani’s Mundra Petrochem project

March 21, 2023

The Adani Group’s Mundra Petrochemicals project has been suspended as part of the Group’s “comeback strategy” to regain investor confidence amidst allegations of accounting fraud and corporate governance lapses. The project aimed to set up a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone (APSEZ) in Gujarat, with a poly-vinyl-chloride (PVC) production capacity of 2,000 KTPA requiring 3.1 MTPA of imported coal. PVC is widely used in various applications, including flooring, sewage pipes, insulation on electrical wires, plastic bottles, and more.

What is the Mundra Petrochemicals project?

Mundra Petrochemicals Ltd was incorporated in 2021 as a wholly owned subsidiary of Adani Enterprises Ltd (AEL) to set up a greenfield coal-to-PVC plant in Kutch district, Gujarat. The project aimed to bridge the gap between domestic production and demand for PVC in India, turning India into a net exporter of PVC.

Why has the project been suspended?

The project’s suspension comes in the wake of allegations of accounting fraud, stock manipulations, and other corporate governance lapses made in the damaging Hindenburg report. The Adani Group has denied all allegations, but roughly USD 140 billion has been wiped out from Gautam Adani’s empire’s market value. To address investor concerns, the Group has planned a “comeback strategy”.

What is the Adani Group’s “comeback strategy”?

The Adani Group’s “comeback strategy” is based on addressing investor concerns around debt, consolidating operations, and fighting off allegations. The Group has cancelled a Rs 7,000 crore coal plant purchase, shelved plans to bid for a stake in power trader PTC, repaid some debt, and pre-paid some finances raised by pledging promoter stake in group companies. The Mundra Petrochemicals project’s suspension is part of the Group’s plan to evaluate the status of growth projects in the primary industry vertical in the coming months.

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