The Adani Group pledged to stick to the original schedule and expressed hope for the financial conclusion of its green PVC project in Mundra within the next six months. The financial closure of Mundra Petrochemicals Ltd.’s (MPL) Green PVC project is still pending, with the financial institutions actively considering it. The Adani Group hopes to close the project’s financing within six months. At this point, full-fledged procurement and construction operations would start on the site.
They’re determined to finish the job quickly to stick to the initial schedules. The Adani SBI collaboration took place in one of the Adani Group’s most significant fundraising events from Indian banks since the Hindenburg Research claims, and they committed to finance a substantial portion of the ₹34,000-crore Adani Group’s polyvinyl chloride (PVC) project in Mundra.
The engineering design and other activities will continue
In 2021, Adani Enterprises Ltd. (AEL), the leading firm of the Adani group, established Mundra Petrochem Ltd. as a wholly-owned subsidiary to establish a greenfield coal-to-PVC facility in the Adani Ports and Special Economic Zone (APSEZ) located in the Kutch area of Gujarat. The spokeswoman added in a news release that the management has chosen to move more quickly with the engineering design and other tasks, such as financial closure, in light of recent market changes.
It stated that the financial closure of M/S Mundra Petrochemicals Limited’s (MPL) Green PVC project is about to come by the banking institutions and is being actively considered by them. Adani SBI would provide funding for the Adani Group’s ₹34,000-crore polyvinyl chloride (PVC) project in Mundra. With this investment, the project is anticipated to close financially.
An Adani Enterprises subsidiary is carrying out the project
Mundra Petrochem, an Adani Enterprises affiliate, is carrying out the project. The project’s first phase will involve installing a plant with a capacity of one million tonnes annually, at a total cost of $2.5 million. The Adani SBI collaboration plan aims to commission the first phase by 2025–2026 and then increase the capacity in the second phase. The Adani Group’s ambitious plans to establish a petrochemical cluster in Mundra and Central include the coal-to-PVC project.
The Group intends to lead and hold a large portion of the market. Domestic lenders, comprising both government and private banks, have a mere 16 percent exposure to the organization. Bonds from international financial institutions have been the source of more than one-third of the Group’s loans.
The bank sees no challenge with the Adani SBI collaboration
According to bank chairman Dinesh Khara, the largest lender in the nation, State Bank of India (SBI) owes the Adani Group ~27,000 crore, or 0.9% of its total loan book. At a media conference following the company’s earnings, Khara stated that the loan amount in the Adani SBI case comprises exposure to both funds and non-funds. Additionally, he noted that the group has fulfilled its payback obligations and that SBI does not anticipate any deterioration in the conglomerate’s capacity to service those loans.
The bank has given the group, loans for projects supported by tangible assets and sufficient cash flow. SBI has not received any requests from the Adani Group to refinance its loans. They haven’t given out any loans secured by stock. Therefore, the decline in stock market values will impact none of the margin calls or the loans they have raised from them. The Reserve Bank of India stated separately that the banks adhere to the extensive exposure framework standards regarding their exposure to group entities.
The direction of a bank to a group of related counterparties must be less than 25% of the lender’s capital base under central bank regulations.
The third most popular synthetic plastic polymer in the world is PVC
With a planned 2,000 KTPA (kilo tonne per annum) poly-vinyl chloride (PVC) production capability, the unit must import 3.1 million MTPA of coal from Russia, Australia, and other nations. The world’s third most-produced synthetic plastic polymer, PVC, is the subject of the Adani SBI collaboration. It has pre-paid the funds raised through the pledge of promoter stakes in group firms. The business promised to reimburse all the money it holds in escrow accounts.
Conclusion
The Adani Group is committed to completing its green PVC project in Mundra on schedule and expects to have financial closure within the next six months. The Adani SBI collaboration is responsible for providing funding for the project, and the bank has stated that it does not anticipate any deterioration in the Adani Group’s ability to service its loans.
