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Adani Group to build $4 billion PVC project by Dec 26
Industry News- Jul 29,24
India's annual PVC demand is approximately 4 million tonnes, but domestic production capacity stands at just 1.5 million tonnes, leading to a substantial supply-demand mismatch.
The Adani Group will commission the first phase of a USD 4 billion PVC project by December 2026, marking its entry into the petrochemicals sector, which currently faces a significant demand-supply gap. Polyvinyl chloride (PVC) is the third most common synthetic plastic polymer, used in products ranging from raincoats and shower curtains to plumbing pipes and medical equipment.
India's annual PVC demand is approximately 4 million tonnes, but domestic production capacity stands at just 1.5 million tonnes, leading to a substantial supply-demand mismatch. The Adani Group aims to capitalise on this gap with its new project.
Adani Enterprises, the group's flagship firm, is developing a petrochemical cluster in Mundra, Gujarat, which will include a PVC plant with a total capacity of 2 million tonnes per annum, to be completed in phases. The first phase, with a capacity of 1 million tonnes per annum, is scheduled for commissioning by December 2026.
The project had previously been put on hold in March last year pending financial closure, following allegations of financial and accounting fraud by US short-seller Hindenburg Research. Although the Adani Group denied these allegations, the report led to a decline in Adani stock and scrutiny of its governance practices. The group then refocused its resources, raised over USD 5 billion in equity and twice that amount in debt, and resumed work on the petrochemical plant as market confidence improved.
A consortium of lenders, led by the State Bank of India (SBI), will finance the project. The Adani Group plans to implement acetylene and carbide-based PVC production processes for the Mundra project. The necessary environmental clearances and consent to establish the project have already been obtained.
PVC is the third most produced synthetic plastic polymer globally, after polyethylene and polypropylene. By 2027, India is expected to add the most polyvinyl chloride capacity worldwide, followed by China and the US. The construction and agriculture sectors are driving PVC demand in India, supported by government initiatives such as the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and the Housing for All program. As a result, PVC demand in India is projected to grow at a CAGR of 8-10% between fiscal years 2023 and 2026.
This project will help bridge the gap between domestic PVC production and demand, supporting the nation's growing infrastructure needs.
(Source: ET)
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