New Delhi: A consortium of banks led by the State Bank of India will finance close to half the Rs 34,000 crore amount needed by the Adani Group for its polyvinyl chloride (PVC) project in Mundra.
Public-sector banks will fund the majority of the consortium’s Rs 14,500 crore contribution and private lenders will fund the rest, a report by The Hindu BusinessLine on Wednesday, July 19 said.
Earlier media reports estimated the private lenders’ contribution at a minimum of Rs. 4,500 crore.
The project involves setting up a coal-to-PVC plant in Mundra, a town in the western Kutch region of Gujarat, that will be undertaken by an Adani subsidiary called Mundra Petrochem.
It will be part of the Adani Group’s plans to develop a petrochemical cluster in the town, BusinessLine’s report said, adding that the plant is expected to have a capacity of one million tonnes and begin operations by 2025 or 2026.
PVC is a kind of low-cost and durable plastic polymer that is used to make pipes, electrical insulation and clothes, among other things.
The Adani Group halted work on the Mundra project in March as part of its business consolidation plans following accusations levied by short-seller Hindenburg Research on the conglomerate that cost it billions of dollars in market value.
“Pending the above it has been decided to keep the major equipment procurement and site construction activities on hold. We are hopeful to obtain financial closure for the project in [the] next six months post which full-fledged procurement and construction activities at site will commence … ” an Adani Enterprises spokesperson said in a press statement.
Gautam Adani, the conglomerate’s chairman, went from being the third richest person in the world to the sixteenth after Hindenburg accused Adani companies of engaging in share price manipulation and fraud.
Adani called the allegations “a deliberate and malicious attempt aimed at damaging our reputation and generating a profit by driving down its stock prices”.
Mint reported that investment plans for the project were revived in June after Mundra Petrochem received an in-principle funding agreement from the consortium.
The consortium’s most recent announcement marks one of the largest contributions of its kind to the conglomerate since Hindenburg’s allegations.
BusinessLine reported that the Mundra project will achieve financial closure by the middle of August as a result of the agreement.
Gautam Adani presided over the annual general meeting of Adani Enterprises, the flagship company in the Adani Group, on Tuesday, July 18, where he forecast an optimistic trajectory for his conglomerate, the Financial Times reported.
According to FT’s report, Adani said that the conglomerate’s balance sheets were “healthier than ever before” and promised to make his logistics company the “most profitable port company in the world” by the beginning of the next decade.
“We could have chosen to settle for average growth numbers, or we could get up every day believing that we are on the cusp of being one of the most impactful conglomerates our nation has built,” FT quoted him as saying.
Adani added that his company was defined by its resilience, which he also said was responsible for “[driving] our belief in the nation we call our matrubhumi (motherland)”.