Adani Group to commission $4 billion PVC project by 2026
What's the story
Indian multinational conglomerate, Adani Group, is set to commission the first phase of a $4 billion Polyvinyl Chloride (PVC) project by December 2026. This move marks the group's foray into the petrochemical sector, currently witnessing a supply-demand disparity in India. PVC, a widely used synthetic plastic polymer, finds applications in products like raincoats, medical equipment and credit cards.
Market disparity
Adani to address PVC demand-supply gap in India
India's annual PVC demand is approximately four million tons, while its domestic production capacity is only around 1.5 million tons. This supply-demand gap is expected to widen with increasing consumption. Adani Group's flagship firm, Adani Enterprises, aims to tap into this sector by establishing a petrochemical cluster in Mundra, Gujarat.
Project resumption
Project to resume after financial allegations
The initial phase of the project, with a capacity of one million tons per annum, is scheduled for commissioning by December 2026. The project was previously halted in March last year due to allegations of financial and accounting fraud at Adani Group companies, by US short seller Hindenburg Research. Despite denying all allegations, the report impacted Adani's stock and brought its governance practices into focus.
Financing
Adani Group secures financing and clearance
Following the restoration of market confidence in the ports-to-energy conglomerate, work on the petrochemical plant resumed. The project will be financed by a consortium of lenders led by the State Bank of India (SBI). Adani Group wants to implement Acetylene and Carbide based PVC production processes for the Mundra project, having already received environmental clearance.
Demand growth
India's PVC demand expected to grow
PVC is the third most produced synthetic plastic polymer worldwide, after polyethylene and polypropylene. By 2027, India is predicted to add the most polyvinyl chloride capacity, followed by China and the US. The construction and agriculture sectors are expected to drive PVC demand in India. Government spending on housing, irrigation, and sanitation, via programs like PMKSY, AMRUT, and Housing for All, are driving the demand for pipes and tubes.