NEW DELHI: The Adani Group plans to start the first phase of a $4 billion PVC (Polyvinyl Chloride) project by December 2026. This marks their entry into the petrochemicals sector, which currently has a gap between domestic demand and supply.
PVC Uses and Demand
PVC is the third most common synthetic plastic polymer in the world. It is used to make various products like raincoats, shower curtains, window frames, plumbing pipes, medical equipment, wire insulation, bottles, credit cards, and flooring. India’s annual PVC demand is around 4 million tonnes, but the country’s production capacity is only about 1.5 million tonnes. This gap between supply and demand is expected to grow as consumption increases, providing an opportunity for the Adani Group.
Adani’s Petrochemical Cluster
Adani Enterprises, the group’s main company, is setting up a petrochemical cluster in Mundra, Gujarat. This cluster will include a PVC plant with a capacity of 2 million tonnes per year, which will be built in phases. According to two sources, the first phase, with a capacity of 1 million tonnes per year, is expected to start by December 2026.
Project Resumption
The project was put on hold in March last year due to financial issues following allegations of financial and accounting fraud by Hindenburg Research. Despite denying all allegations, Adani stocks fell, and the group’s governance practices were scrutinized. The Adani Group then refocused on its core businesses, raised over $5 billion in equity, and paid off some debts. As market confidence returned, the group resumed work on the petrochemical plant. The project will be financed by a consortium of lenders led by the State Bank of India (SBI).
Production Process and Future Plans
For the Mundra project, Adani Group plans to use Acetylene and Carbide-based PVC production processes. They have already received environmental clearance and consent to establish the project.
PVC Market Growth
After polyethylene and polypropylene, PVC is the third most produced synthetic plastic polymer globally. By 2027, India is expected to add the most PVC capacity, followed by China and the US. The construction and agriculture sectors are driving PVC demand in India. Government spending on housing, sanitation, and irrigation through programs like PMKSY, AMRUT, and Housing for All is boosting the demand for pipes and tubes. PVC demand is expected to grow at a CAGR of 8-10% from fiscal years 2023 to 2026 due to increased infrastructure spending and various government initiatives.
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