Business

Adani Group suspends work on Rs.34,900 cr petrochemical project in Gujarat after Hindenburg row

The comeback strategy is based on addressing investor concerns around debt by repaying some loans, consolidating operations, and fighting off allegations

PGurus Newsdesk

March 19, 2023

The comeback strategy is based on addressing investor concerns around debt by repaying some loans, consolidating operations, and fighting off allegations

Adani Group halts Gujarat Project after Hindenburg fallout

The Adani Group, one of India’s largest conglomerates, has suspended work on an Rs.34,900 crore petrochemical project at Mundra in Gujarat as it focuses on resources to consolidate operations and address investor concerns following a damning report by a US-based short seller Hindenburg Research, sources said.

The group’s flagship Adani Enterprises Ltd (AEL) had in 2021 incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd for setting up a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone (APSEZ) land in the Kutch district of Gujarat. But after Hindenburg Research’s January 24 report alleging accounting fraud, stock manipulations, and other corporate governance lapses chopped off about USD 140 billion from the market value of Gautam Adani’s empire, the apples-to-airport group is hoping to claw back and calm jittery investors and lenders through a comeback strategy.

With the company trying to make a comeback for the time being the 1 million tonne per annum Green PVC project is one of the projects that will be suspended till further notice, reported. The group has denied all allegations levelled by Hindenburg. As part of this, projects are being re-evaluated based on cash flow and finance available.

In the mails, the group has asked vendors and suppliers to “suspend all activities of the scope of work and performance of all obligations” for Mundra Petrochem Ltd‘s Green PVC project “till further notice.”

The Hindenburg report had alleged “brazen stock manipulation and accounting fraud” and the use of offshore shell companies to inflate stock prices. The group has denied all Hindenburg allegations, calling them “malicious“, “baseless” and a “calculated attack on India”.

To ensure a successful recovery, the group has put a stop to their Rs.7,000 crore coal plant purchase and suspended their plans to make an offer for PTC’s shareholdings. Additionally, they have paid off some of their debt as well as pre-paid payments secured by using their promoter stake in other business entities.

It remains to be seen how this battle will play out and its impact on the Adani Group’s future growth prospects. In the meantime, investors will be closely watching the Adani Group’s next move as the fallout from the Hindenburg report continues to reverberate through the markets.

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