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In one of the largest fundraising by the Adani Group from Indian banks since the allegations by Hindenburg Research, a State Bank of India-led consortium of banks has agreed to finance a significant part of the Adani Group’s ₹34,000-crore polyvinyl chloride (PVC) project in Mundra. With this financing, the project is set to achieve financial closure by the middle of August, sources told businessline.
Funding for the first phase of the project is being raised from public sector banks, which will pick up the bulk of the tab of around ₹14,500 crore, with private lenders chipping in for the remainder. The project, being undertaken by an Adani Enterprises subsidiary, Mundra Petrochem, envisages setting up a plant with an annual capacity of 1 million tonne in the first phase at a cost of around $2.5 billion. The capacity will be doubled in the second phase after commissioning the first phase by 2025–26.
Major financing deal
The coal-to-PVC project is a key component of the group’s ambitious plans to develop a petrochemical cluster at Mundra and central to its overall strategy to be a significant 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 set back its expansion plans temporarily.
State Bank of India did not respond to emails sent both to the chairman’s office and the public relations team. A phone call and a text message to Chairman Dinesh Khara did not elicit a reply. The Adani group also did not respond to an email seeking clarification.
Also read: Hindenburg report combination of targeted misinformation, discredited allegations: Adani
Limited exposure
Domestic lenders — State-run banks, private banks, and lines of credit from PSU banks for capex — have only about 16 per cent exposure to the group. Over a third of the group’s borrowings are through bonds issued overseas and funding from global international banks.
Several major capex plans, including the petrochem project, had been suspended by the group in February after the Hindenburg allegations. Repaying short-term maturing debt, deleveraging the balance sheets of individual companies, repaying share-backed financing, and reducing pledged shares of the promoter group became priorities for the group. In March, it got a lifeline from GQG Partners, which infused over Rs 15,000 crore by buying small stakes in four group companies from the promoter group.
Companies in the group have posted decent performances in the March quarter and in FY23, giving it the confidence to resume its capex plans. The group has also been assiduously building confidence among lenders and investors through several roadshows. As founder and chairman Gautam Adani iterated on Tuesday, the group is in a better financial position than it was earlier this year.
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