
Adani set to revive Mundra PVC project

Summary
- Mundra Petrochem to get ₹14,000 cr credit line from banks
MUMBAI : Adani Group has revived its investment plan for Mundra Petrochem Ltd, India’s largest polyvinyl chloride (PVC) plant, with initial funding of ₹14,000-16,000 crore, after a four-month suspension of operations, two people directly aware of the development said.
Mundra Petrochem has secured an in-principle approval for a credit line of up to ₹14,000 crore from a clutch of large domestic banks, the people said, adding that the total project cost will be around ₹35,000 crore. “Seventy per cent of the money to be used in the planned capex is likely to come from state-run lenders," one of the two said, requesting anonymity.

In February, the group indefinitely suspended several capital investment activities, including the petrochemical project, prioritizing debt repayment and de-leveraging the balance sheets of group companies instead, to assuage investor concerns raised by a 24 January report on the group by US short-seller Hindenburg Research.
“The financial closure for Mundra Petrochem is likely to be completed by mid-June, following which the commissioning activity, including equipment procurement and site construction, will commence," the person said.
Queries sent to an Adani Group spokesperson on Monday did not elicit a response.
At least half a dozen local banks are part of the consortium, the people cited above said. While most of the funds may come from state-run lenders, private lenders will lend at least ₹4,500 crore via the consortium, they said.
According to Adani Group’s latest plan, the group will seek an additional $2 billion for the Mundra project after fully utilizing the initial $2 billion sanctioned, the second person said.
“The first disbursement amount from the sanctioned limit of domestic banks for Mundra is likely to come to Adani Group in the second week of June," the first person said.
Some of the lenders have met Adani Group officials recently, according to the two people. “The lenders may conduct a review of the group before dispensing the first disbursal," the first person said.
The group is banking on the Mundra Petrochem project, located on Adani Ports and Special Economic Zone Ltd’s land in Gujarat’s Mundra, to boost its operating profit over the coming years and lower its leverage.
The group told exchanges in February that it was “re-evaluating various projects being implemented at the group level in different business verticals." Adani said some of the projects were being re-evaluated based on the future cash flow and finance. Pending the evaluation, the group decided to keep the major equipment procurement and site construction activities at Mundra Petrochem on hold. However, with the financial closure of the Mundra Petrochem project approaching, work is expected to resume at full throttle, the two people said.
Group flagship Adani Enterprises Ltd incorporated Mundra Petrochem in 2021 to set up a coal-to-PVC plant.
The Mundra Petrochem plant, once commissioned, will have a PVC production capacity of 2,000 kilotonne per annum, requiring 3.1 million tonnes per annum of coal that will be imported mainly from Australia and Russia.
The Mundra Petrochem project may become one of the group’s mainstay businesses as it may fill a critical gap in the country’s PVC industry. PVC is the third-most widely produced synthetic polymer of plastic in the world, after polyethylene and polypropylene. Its applications range from making pipes and flooring to insulation on electrical wires, manufacture of bottles, non-food packaging, food-covering sheets, and important plastic cards.
India produced about 1.45 million tonnes of PVC in 2022 and imported an additional 1.5 million tonnes, data from the Alkali Manufacturers Association of India showed. Mundra Petrochem aims to turn India into a net exporter of PVC.
At the group level, Adani aims to boost its operating profit and lower leverage from 4.1 times now to 3.2 times by March 2024. In line with this strategy, the group on Monday said it completed the repayment of $2.65 billion in debt.
Adani Group cut promoter pledges and made bond repayments worth $3 billion in the three months ended 31 March, using the $1.88 billion equity funding from GQG Partners and an additional $1 billion infusion from the promoter group.