In one of the Adani Group’s largest fundraising rounds with Indian banks since the Hindenburg Research claimsA National Bank of IndiaThe consortium of banks led by Adani Group has agreed to fund a significant portion of Adani Group’s ₹34,000 crore polyvinyl chloride (PVC) project in Mundra. With this funding, the project is expected to reach financial close by mid-August, sources said. activity area.
Funding for the first phase of the project is being raised from public sector banks, which will fund the bulk of the tab of around ₹14,500 crore, with private lenders contributing the rest. The project, undertaken by a Adani Enterprises its subsidiary, Mundra Petrochem, plans to set up a plant with an annual capacity of 1 million tonnes in a first phase at a cost of around 2.5 billion dollars. The capacity will be doubled in the second phase after the commissioning of the first phase by 2025-2026.
Major financing transaction
The coal-PVC project is a key part of the group’s ambitious plans to develop a petrochemical hub in Mundra and central to its overall strategy to be a major player in the segment.
This will be a major bank financing deal for the group after the Hindenburg report in January, which derailed the group’s plans to raise ₹20,000 crore through a follow-on public offering and temporarily delayed its expansion plans.
The State Bank of India did not respond to emails sent to both the president’s office and the public relations team. A phone call and text message to President Dinesh Khara did not elicit a response. Adani Group also did not respond to an email seeking clarification.
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Limited exposure
National lenders — Public banks, private banks, and PSU banks’ credit lines for capital expenditure – only have around 16% exposure to the group. More than a third of the group’s borrowing is through bonds issued abroad and financing from global international banks.
Several major investment plans, including the petrochemical project, were suspended by the group in February after Hindenburg’s allegations. Paying down short-term maturing debt, deleveraging the balance sheets of individual companies, repaying equity-backed financing and reducing the promoter group’s pledged shares have become priorities for the group. In March, he got a lifeline from GQG Partners, which infused more than Rs 15,000 crore by buying small stakes in four group companies from the promoter group.
The group’s businesses showed decent performance in the March quarter and FY23, giving it the confidence to resume its investment plans. The group has also assiduously boosted the confidence of lenders and investors through several roadshows. As founder and chairman Gautam Adani said on Tuesday, the group is in a better financial position than it was earlier this year.
