Adani Group clarifies on Gujarat petchem project, says financial closure likely in 6 months

Adani Group said today said that its engagement with financial institutions over a petrochemical project at Mundra in the Gujarat was still ongoing. The company clarified after Press Trust of India reported on Sunday that the embattled group had suspended work on the Rs 34,900 crore Green PVC project after the Hindenburg short seller report.

"The financial closure of the Green PVC project of M/S Mundra Petrochemicals Limited ( MPL) is pending with the financial institutions and it is in their active consideration. Due to recent market developments, the management has decided to continue with the Engineering design and other activities including financial closure in an accelerated mode," the Adani group in a communication to exchanges.

Pending financial closure, "it has been decided to keep the major equipment procurement and site construction activities on hold," the conglomerate said. The Adani group also said that it is hopeful of obtaining financial closure for the project in next six months post which full-fledged procurement and construction activities at site will commence.

"We are committed to completing the project in an expeditious manner so as to meet the original timelines," it said.

Citing sources, the Press Trust of India report had said that the Adani group "has decided not to pursue for the time being is the 1 million tonnes per annum Green PVC project. The group has shot off emails to vendors and suppliers to suspend all activities on immediate basis."

The unit was to have a poly-vinyl-chloride (PVC) production capacity of 2,000 KTPA (kilo tonne per annum) requiring 3.1 million tonnes per annum (MTPA) of coal that was to be imported from Australia, Russia and other countries. PVC is the world's third-most widely produced synthetic polymer of plastic. It finds wide applications - from flooring, to making sewage pipes and other pipe applications, in insulation on electrical wires, packaging and manufacture of aprons etc.

As part of the new corporate strategy after the Hindenburg report, the group has cancelled a Rs 7,000 crore coal plant purchase as well as shelved plans to bid for stake in power trader PTC to conserve expenses. It has repaid some debt and pre-paid some of the finances raised by pledging promoter stake in group companies. (With Agency Inputs)