Adani Group's Rs 34,000-Crore PVC Project In Mundra To Get Funding From SBI-Led Consortium: Report

In a significant fundraising development for the Adani Group, a consortium of banks led by State Bank of India has agreed to finance a major portion of the Adani Group's Rs 34,000-crore polyvinyl chloride (PVC) project in Mundra.

This financing will enable the project to achieve financial closure by mid-August, The Hindu Businessline reported citing sources.

The funding for the initial phase of the project will primarily come from public sector banks, contributing around Rs 14,500 crore, with private lenders contributing the remaining amount.

The project, undertaken by Adani Enterprises subsidiary Mundra Petrochem, aims to establish a plant with an annual capacity of 1 million tonnes in the first phase, costing around $2.5 billion.

After the successful commissioning of the first phase by 2025-26, the capacity will be doubled in the second phase.

The coal-to-PVC project holds significant importance for the Adani Group's plans to develop a petrochemical cluster in Mundra. It will also play a central role in the group's overall strategy to establish a strong presence in this segment.

This bank financing deal marks a major milestone for the Adani group following the Hindenburg Report in January, which disrupted the group's plans to raise Rs 20,000 crore through a follow-on public offering and temporarily hindered its expansion plans.

Around 16 per cent of the Adani group's exposure comes from domestic lenders, including state-run banks, private banks, and lines of credit from PSU banks for capex.

Over a third of the group's borrowings are from bonds issued overseas and funding from international banks.

Following the Hindenburg allegations, the group suspended several major capex plans, including the petrochem project, in February.

Repaying short-term maturing debt, reducing leverage in individual companies' balance sheets, repaying share-backed financing, and decreasing pledged shares of the promoter group became top priorities of the group.

In March, GQG Partners provided a lifeline to the group by investing over Rs 15,000 crore to buy small stakes in four Adani companies from the promoter group.

With decent performances of the group's companies in the March quarter and FY23, the group has gained confidence to resume its capex plans.

The group has also been actively building trust among lenders and investors through various roadshows.

According to founder and chairman Gautam Adani, the group is in a better financial position now compared to earlier this year.