Setback to self-reliance in PVC production? Adani move to suspend Mundra project

By NS Venkataraman* 
There are not many project promoters in India who can qualify to be capable of investing thousands of crore of rupees in large projects that could be globally competitive. Most of such large projects have been set up in the past by public sector organisations such as the Indian Oil Corporation.

More recently, several corporate houses -- Reliance, Adani, Vedanta, Birla, to name a few, have announced large sized projects in the private sector in India. However, recent negative campaigns have led to a piquant situation. A few of such projects, both in the private and public sector, have been halted, causing setback to India’s corporate world.
Sterlite Copper in Tuticorin in Tamil Nadu is one such project now remaining closed due to one such campaign against the project with regard to environmental issue. As a result, India, which was a net exporter of copper when Sterlite Copper was operating, has now become a net importer of copper, resulting in huge outflow of foreign exchange.
Sterlite Copper is remaining closed for over three years now. But, there is no change for better in the soil or atmospheric conditions in Tuticorin after the closure. Obviously, this proves that Sterlite has not caused any environmental issue.

PVC project

India is now a large importer of polyvinyl chloride (PVC resin), as demand for PVC is steadily increasing and domestic production could not be stepped up. Main constraint for India in increasing the production of PVC is lack of adequate production of feedstock ethylene by the petrochemical route.
Indian present production of PVC is around 1.5 million tonne per annum. Indian present import of PVC is around 1.73 million tonne per annum. In such scenario, the Adani group came forward to implement large-scale coal based PVC project in Gujarat.
The group's flagship Adani Enterprises Ltd (AEL) had in 2021 incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd., for setting up a greenfield coal-to-poly-vinyl-chloride (PVC) plant at Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat.
The unit was to have a PVC production capacity of 2,000 kilo tonne per annum requiring 3.1 million tonne per annum of coal that was to be imported from Australia, Russia and other countries.
The Adani Group has now announced that it has suspended work on a Rs 34,900 crore PVC project at Mundra in Gujarat, as it focuses on resources to consolidate operations and address investor concerns following a damning report by a US-based short seller.
Though the Adani Group has said that they are still committed to the PVC project, one has to keep fingers crossed about the fate of this large-scale and much needed PVC project.

Case study

It all began with a US-based short seller, Hindenburg Research, brought out an adverse report on Adani group which sent shock waves amongst the investors. The authorities in India and their corporate supporters insist, however, it is becoming increasingly clear after detailed investigation by various agencies that the Adani Group has been sinned against rather than sinning.
They also claim, the balance sheet of each of independent portfolio companies of the Adani Group is reasonably strong. The Adani Group says that it has proven project development and execution capabilities, strong corporate governance, secure assets, strong cash flows.
The suspended PVC project proposal of Adani group is a case study as to how strong are financial research organisations, who allegedly focus more on hate campaign with very little understanding of the holistic scenario.
This scenario is causing apprehension amongst many corporate project promoters in India, who fear that any such campaign managing to get media publicity can halt a project, with the corporate sector paying big price.
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*Trustee, Nandini Voice For The Deprived, Chennai