Adani Group to Commission $4 Billion Petrochemical Project by Next Year
The Adani Group is set to make a significant entry into the petrochemicals sector with the commissioning of the first phase of its USD 4 billion Polyvinyl Chloride (PVC) project by December 2026. This ambitious project is poised to address the substantial supply-demand imbalance in India's PVC market, where annual demand far exceeds domestic production capacity.
Polyvinyl Chloride, commonly known as PVC, is the third-most produced synthetic plastic polymer globally. It is a versatile material used in a wide range of products, including raincoats, shower curtains, window frames, plumbing pipes, medical equipment, wire and cable insulation, bottles, credit cards, and flooring. India’s annual PVC demand stands at approximately 4 million tonnes, but the country’s production capacity is only around 1.5 million tonnes, leading to a significant supply gap.
Adani Enterprises, the flagship company of the Adani Group, is developing a petrochemical cluster in Mundra, Gujarat, to bridge this gap. Within this cluster, the company plans to establish a PVC plant with a total capacity of 2 million tonnes per annum, to be developed in phases. According to sources with direct knowledge of the matter, the initial phase, which will have a capacity of 1 million tonnes per annum, is scheduled for commissioning by December 2026.
The project had faced a temporary halt in March last year when the Adani Group decided to pause major equipment procurement and site construction activities pending financial closure. This decision came after a report by US short seller Hindenburg Research alleged financial and accounting fraud at Adani Group companies. Although the Adani Group vehemently denied all allegations, the report led to a significant drop in the company's stock prices and raised concerns about its governance practices.
In response to these challenges, the Adani Group refocused its resources on its core competencies and devised a robust comeback strategy. This strategy involved raising over USD 5 billion in equity and double that amount in debt, repaying some debts, and fully repaying share-backed financing. As market confidence in the conglomerate gradually returned, the Adani Group resumed work on the petrochemical project.
The State Bank of India (SBI)-led consortium of lenders will be financing the project, which will employ Acetylene and Carbide-based PVC production processes. The project has already received environmental clearance and consent to establish the necessary infrastructure.
PVC is the third most produced synthetic plastic polymer worldwide, following polyethylene and polypropylene. By 2027, India is expected to lead the world in adding PVC production capacity, followed by China and the United States. The construction and agriculture sectors are the primary drivers of PVC demand in India.
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 are significantly boosting the demand for pipes and tubes. Sources indicate that PVC demand is projected to grow at a compound annual growth rate (CAGR) of 8-10% between fiscal years 2023 and 2026, driven by increased infrastructure spending and various government initiatives.
