The Hindenburg report seems to have had a prolonged effect on the Adani Group. Just recently the Adani group canceled a Rs 7,017 crore coal plant purchase and took aback its bid for a stake in power trader PTC India. Now according to a new PTI report, the Adani Group has suspended work on a Rs 34,900 crore petrochemical project in Mundra, Gujarat. The fresh report on the 1 million tonnes per annum Green PVC project, if true, would add to the group’s recent steps to downsize its debts.
SOURCE- MSN
The move, according to the Adani group, is taken in the direction of the company wanting to focus on resources to consolidate operations and address investor concerns following a damning report by a US-based short seller, PTI sources said. Mails were sent to all vendors and suppliers to “suspend all activities and performance of all obligations till further notice’’. The report further said that the conglomerate’s management was re-evaluating various projects based on its future cash flow and finances.
PROJECT HISTORY
The project was first initiated in 2019 in Gautam Adani’s home state of Gujarat when he announced plans to foray into India’s petrochemicals sector. And two years later, in 2021 he incorporated a wholly-owned subsidiary Mundra Petrochem and Adani Petrochemicals to feedstock-based refineries and petrochemical complexes. Both Mundra Petrochem and Adani Petrochemicals are 100% subsidiaries of Adani Enterprises Limited (AEL), set up for a greenfield coal-to-PVS plant at the Adani Ports and Special Economic Zone land in the Kutch district of Gujarat.
WHAT LED TO THIS DECISION
During January this year, an investment research firm that focuses on short-selling, Hindenburg Research LLC published an investigation alleging that Gautam Adani, founder, and chairman of the group, added over $100 billion to his net worth over the last few years, largely through stock price appreciation of 7 of its listed companies, which reportedly spiked about 819% during this period.
SOURCE- ORGANISER
This report came just in time when Adani Enterprises opened the second largest follow-on share sale of Rs. 20000 crores. The shares which were originally offered at a discounted market price, fell way below the offer price, causing a massive sell-off.
Gautam Adani who was then the world’s third and Asia’s richest man slipped to No. 30 in the world list, with a downward plunge of USD 140 billion in his wealth.
The group has denied all the allegations levied by Hindenburg. Now, the group is focussing on how to claw back and restore the trust of investors And lenders through a comeback strategy. The devised plan as of now seems to be addressing investor concerns around debt by repaying some loans, consolidating operations, and fighting off the allegations. And as a part of this, all the recent projects are being re-evaluated based on the finance available.
RECENT PROJECTS STOPPED.
The recent projects in which the enterprise has made changes- whether in terms of re-evaluating them, revision of plans, or stopping them altogether are as follows
- The most recent is the 1 million tonnes per annum Green PVC project, where all the activities are to be suspended on an immediate basis, as per insider sources of a recent report.
- As a part of its comeback strategy, the group has canceled an Rs. 7000 crore coal plant purchase. It has also shelved its plan to bid for stakes in PTC, a power trader to conserve expenses.
- Among other projects, Adani group is also looking to sell a stake in Ambuja Cement as a part of debt reduction.
