Almost six months after announcing plans to revive the project, the Gautam Adani-led Adani Group has signed a joint venture agreement with Thailand’s Indorama Resources Ltd to establish a comprehensive petrochemical, refinery, and chemical business in India. This strategic partnership aims to enhance the production of petrochemicals, such as polyvinyl chloride (PVC), for which India faces a significant supply deficit.
Under the agreement, Adani Petrochemicals Ltd (APL), a subsidiary of Adani Enterprises Ltd (AEL), will set up a joint venture company, Valor Petrochemicals Ltd (VPL), in collaboration with Indorama Resources. Both companies will hold an equal 50 percent stake in VPL, which will focus on developing a robust refinery, petrochemical, and chemical business. The venture underscores Adani’s ambitious expansion plans in this sector.
| India’s PVC demand-supply (million tonnes) |
| Financial year | Domestic demand | Total capacity | Operating rate (%) |
| 2029-30 (f) | 6.0 | 4.0 | 81 |
| 2028-29 (f) | 5.6 | 3.5 | 83 |
| 2027-28 (f) | 5.2 | 3.5 | 75 |
| 2026-27 (f) | 4.9 | 3.0 | 77 |
| 2025-26 (f) | 4.6 | 2.0 | 88 |
| 2024-25 (f) | 4.3 | 1.7 | 90 |
| 2023-24 (p) | 4.0 | 1.6 | 89 |
| 2022-23 (p) | 3.7 | 1.6 | 90 |
| 2021-22 (a) | 2.8 | 1.6 | 89 |
Source: Polymerupdate Research; a = Actual, p = Projection, f = Forecast
Renewed strategyOver 16 months after suspending operations, APL unveiled a fresh strategy in July 2024 to revive its petrochemical foray and enter the undersupplied PVC manufacturing market. The company’s first phase of the proposed 2 million tonnes per annum (MTPA) PVC manufacturing plant is scheduled to begin commercial production by December 2026, marking the Group’s entry into the petrochemical sector.
The plant is being established in Mundra, Gujarat, with a proposed investment of US$ 4 billion (Rs 37,900 crore). In 2021, AEL incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd, to develop a 2 MTPA greenfield coal-to-PVC plant on land owned by its group company, Adani Ports and Special Economic Zone (APSEZ), in the Kutch district of Gujarat. Reports indicate that AEL is creating a petrochemical cluster in Mundra, which will include 2 MTPA of PVC manufacturing facilities. The project is planned for phased completion, with Phase I of the PVC manufacturing facility expected to be commissioned by December 2026.
Project suspensionAiming to consolidate operations and address investor concerns following allegations of irregularities by U.S.-based short-seller Hindenburg Research, the Adani Group decided in March 2023 to suspend work on its Rs 34,900 crore petrochemical project in Gujarat. This decision also casts a shadow on the Group’s raw material sourcing business. The Group had earlier planned to enter the business to supply raw materials for its proposed PVC plant. Although the coal-to-PVC plant was initially considered a costly proposition, it was seen as a step toward enhancing India’s self-reliance in PVC supply.
The Group began re-evaluating projects based on financial feasibility and cash flow availability. While some debts were repaid, projects in the early stages of development were suspended. Reports indicate that the Group decided not to proceed with the coal-to-PVC plant initially planned for Mundra, Gujarat. As part of its re-evaluation strategy, the company also cancelled a Rs 7,000 crore coal plant acquisition and shelved proposals to bid for a stake in power trading company PTC India to conserve resources.
Original planThree years ago, the Adani Group proposed establishing a 2 million tonnes per annum (MTPA) coal-to-PVC plant with an investment of US$ 4 billion. The project was expected to produce PVC grades such as suspension PVC resin, chlorinated PVC (CPVC), and emulsion PVC (paste). The feedstock coal, approximately 3.1 MTPA, was planned to be sourced from Australia, Russia, and other countries. The Group anticipated commencing commercial production of this coal-to-PVC project within four years of receiving statutory approvals.
However, months later, the Group sent emails to its vendors and equipment suppliers, directing them to suspend work on at least 1 MTPA of the greenfield PVC project due to circumstances beyond its control. The email further instructed vendors and suppliers to “suspend all activities within the scope of work and the performance of all obligations until further notice due to unforeseen scenarios” related to Mundra Petrochemical Ltd’s Green PVC project.
The email also stated that the Group was re-evaluating various projects under implementation across different business verticals. Some ongoing projects are being reviewed to determine their continuation or revision of timelines based on future cash flows and financial availability. Reports suggest that work under the primary industry vertical will undergo further re-evaluation in the coming months.
Current statusThe Adani Group has already obtained environmental clearance and consent to establish the project and now plans to implement acetylene- and carbide-based PVC production processes for the Mundra project. The Group’s petrochemical plant at Mundra received a fresh lease on life as the State Bank of India (SBI) prepared to lend approximately Rs 17,000 crore to the project, covering about 50 percent of its capital expenditure requirements.
The loan, provided by a consortium led by India’s largest lender, SBI, will be part of the financial closure program for Adani Petrochemicals Ltd’s coal-to-polyvinyl chloride (PVC) plant, which is set to become India’s largest PVC manufacturing facility upon completion.
Growing PVC consumptionIndia’s PVC demand has been rising steadily in recent years, driven by increased government spending on infrastructure. However, domestic production has not grown at a similar pace. Industry estimates place India’s total PVC demand at 4 million tonnes, while domestic production capacity is just 1.6 million tonnes. Consequently, approximately 60 percent of India’s PVC demand is met through imports. This gap presents a significant opportunity for producers to establish new manufacturing units and make India "Aatmanirbhar" (self-reliant) in PVC supply, aligning with the growing demand. India’s overall PVC demand is projected to rise by 50 percent cumulatively, reaching 6 million tonnes per annum (MTPA) by the financial year 2029-30.
India’s construction and agriculture sectors are major drivers of PVC demand. Increasing government spending on housing, sanitation, and irrigation through initiatives such as PMKSY, AMRUT, and ‘Housing for All’ is fuelling the demand for pipes and tubes. Sources indicate that PVC demand is expected to grow at a compounded annual growth rate (CAGR) of 8–10 percent during four-year period ending FY 2025–26, supported by heightened infrastructure spending and various government initiatives.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
