Hindenburg Research’s allegations of fraud against India’s Adani Group may have scuppered another of the conglomerate’s mega projects.
Gautam Adani-led group has suspended work on a $4.2 billion petrochemical project in the western Indian state of Gujarat, PTI reported yesterday (March 19). The move is driven by the need to focus on resources to consolidate operations and alleviate investor concerns, the news agency’s report said.
The management is “re-evaluating various project/s being implemented at group level in different business verticals. Based on future cash flow and finance, some of the project/s are being re-evaluated for its continuation and revision in the timeline,” the report said citing sources.
Mundra Petrochem was incorporated in 2021 to set up a greenfield coal-to-poly-vinyl-chloride plant on Adani Ports-owned land in Kutch.
However, Hindenburg has compelled it to re-evaluate its projects.
The Adani group reportedly sent emails to suppliers and vendors to “suspend all activities of the scope of work and performance of all obligations” for Mundra Petrochem’s Green PVC project “till further notice,” PTI reported.
Adani group shares fell today, with Adani Enterprises losing 3.5%. Adani Power and Adani Total Gas shed 5% each, while Adani Ports stocks fell by 2%.
Adani has halted other major projects, too
US-based Hindenburg’s allegations about stock manipulation and accounting fraud have robbed the Adani Group of around $140 billion in market capitalization since the damning report was published on Jan. 24. The group has been fighting back by repaying some of its debt and consolidating operations.
Last month, Adani terminated a coal plant purchase deal worth nearly $850 million related to DB Power, the company responsible for thermal power stations in Chhattisgarh state. It also decided to not bid for a stake in state-controlled energy trading firm Power Trading Corporation, looking to save cash.