Adani, JSW and SembCorp in race to buy BC Jindal group’s Odisha power plant
Concerns over fuel supplies and high interest cost, etc., have led to distress among several power firms, leading to many assets changing hands
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Jindal India Thermal Power Ltd (JITPL), a part of the BC Jindal group, is in talks with prospective buyers to sell its 1,200MW thermal power plant in Odisha, three people familiar with the development said.
The plant in Odisha’s Angul district has so far received competing offers from Singapore’s SembCorp, Adani Power and JSW Energy, one of the three people cited above said, requesting anonymity.
“The sell side mandate was given to EY around three months ago following which SembCorp has made an upfront cash offer of close to Rs1,600 crore for the equity component of the project,” said the person cited above.
“JSW and Adani have offered a higher price of more than Rs2,000 crore, but the offer involves an upfront cash payment of around Rs500 crore to Rs600 crore towards equity and the remaining upon fulfilment of certain conditions linked to singing of power purchase agreements and coal linkages,” the person said.
“JSW is keen to replicate the same structure it followed while buying JSPL’s (Naveen Jindal-led Jindal Steel and Power Ltd’s) 1,000MW thermal unit this year, where it paid Rs500 crore cash advance while tying up the rest of the payment to pre-defined conditions regarding fuel security and power offtake,” the person added.
Emails sent to Adani group, SembCorp and EY did not elicit any response at the time of going to press.
A JSW Energy spokesperson denied that the company is in talks to buy the asset.
“Your query is completely speculative and baseless. The company reiterates that there is no truth and categorically deny any discussion by JSW Energy with them,” the spokesperson said.
JITPL is controlled by listed firms Jindal Poly Investments Ltd (JPIL) and Jindal Photo Ltd (JPL) through Jindal India Powertech Ltd, a holding company owned by JPIL and JPL.
“The promoters have been in talks to sell the unit in the past too, but a deal did not materialize due to valuation mismatches. However, things are likely to be different this time because JITPL needs some immediate cash infusion to pay lenders and is already behind its repayment schedule,” the second person said, also declining to be named.
“Also, a section of minority shareholders want the promoters to divest from power and focus on the core poly films business,” the person added.
An email sent to JITPL and BC Jindal group did not receive a response.
The Angul project was completed at a cost of Rs7,537 crore with overall debt of Rs5,900 crore and an equity of Rs1,637 crore.
Industry analysts said that if the SembCorp offer is accepted, JIPL and JPL could get Rs600 crore and Rs160 crore, respectively, of the proceeds and another Rs685 crore to Jindal Poly Films Ltd, the listed operating entity of the group.
JITPL currently has long-term power purchase agreements (PPAs) for 256MW capacity (156MW with Odisha Gridco and 100MW with Kerala State Electricity Board Ltd) and has also executed a 12-year PPA with Tata Power Trading Corp. Ltd (TPTCL) for a capacity of up to 900MW at a guaranteed base tariff of Rs2.70 per unit.
Concerns over fuel supplies, high interest cost and absence of long-term PPAs among thermal power producers in India has led to distress among several power companies and has led to many assets changing hands.
In July, Sajjan Jindal-promoted JSW signed a definitive agreement to acquire Jaiprakash Power Ventures’ 500MW thermal plant at Bina in Madhya Pradesh at base enterprise value of Rs2,700 crore. In April last year, Adani Power completed the acquisition of Lanco Infratech’s Udupi Power plant for Rs6,300 crore, one of the largest takeovers in the country’s thermal power space.
Mint on 19 October also reported about SembCorp’s ongoing talks with GMR group for a possible acquisition of GMR Chhattisgarh Energy Ltd, a unit of GMR Energy Ltd with 1,370MW generation capacity.