The recent exposè by the Hindenburg research on Adani Group has become the apple of discord between the two companies. In a recent turn of events, the conglomerate, which is already at a pinch at the share market, has indefinitely halted construction on its $4 billion (about Rs 34,000 crore) coal-to-polyvinyl chloride (PVC) factory in Mundra, Gujarat.
According to sources, after a devastating report by a US-based short seller, the company is concentrating on its resources to streamline operations and allay investor concerns.
The project was scheduled to start up in 2025 or 2026 and consume up to 3.1 million tonnes of feedstock coal annually that was imported from Australia, Russia, and other nations.
Adani Enterprises Ltd. (AEL), the group’s flagship company, had established a wholly-owned subsidiary in 2021 called Mundra Petrochem Ltd. with the aim to construct a brand-new coal-to-PVC factory on land owned by Adani Ports in the Kutch region of Gujarat.
Furthermore, the corporation has decided to abandon its project on financing plans. According to an investment banker informed of the situation, it was in discussions to finance Rs 14000 crore from a consortium of seven to eight banks led by the State Bank of India.
AEL’s representative informed the news agency that each independent portfolio company in the group has a very robust balance sheet and the business plan is fully funded, and that they have excellent corporate governance, secure assets, and industry-leading project development and execution skills. The group is still committed to implementing the previously described approach to benefit their stakeholders.
The use of offshore shell firms and blatant stock manipulation and accounting fraud were both mentioned in the Hindenburg report. The organisation has refused to accept those charges, and accused the report on being a conspiracy against India by led by the west.
In an effort to win back investors’ trust, the firm is currently cancelling several projects and paying off some obligations in advance. Recently, the ailing business postponed plans to submit a bid for a share in electricity trader PTC and cancelled a Rs 7,000 crore coal plant purchase. Prior to the agreed deadline of March 31, 2023, the business revealed last week that it has fully prepaid all of the $2.15 billion in margin-linked share-backed borrowing. The group claimed that the promoters had paid back the $500 million loan used to purchase Ambuja.
Earlier, Gautam Adani-led Adani Group, whose equities have been one of the major movers of the stock market over the previous three years, dropped significantly at the stock market to the extend even maintain a positive price level and all of this took place in only one week after the Hindenburg’s report.
In other words, the report wiped off a significant portion of Gautam Adani’s nearly $100 billion in earnings over the previous three years.
The market crash began on January 25 after American short-seller Hindenburg Research released a report claiming stock manipulation by the Adani Group and expressing worries about excessive debt and valuations.
The Ahmedabad based multinational corporation was established by Gautam Adani as a commodities trading company in 1988, with Adani Enterprises as its centrepiece. The Group’s broad industries include port management, electric power production and transmission, renewable energy, mining, airport operations, natural gas, food processing, and infrastructure.