Mumbai: A bankruptcy court has admitted the insolvency plea against Sai Wardha Power Generation Ltd, which runs a 540megawatt (MW) power plant. The National Company Law Tribunal’s (NCLT) Hyderabad bench admitted the insolvency plea filed by fund India Opportunities III Pte Ltd and trustee services firm Vistra ITCL (India) Ltd. The private equity fund and the trustee had approached the tribunal with a claim of 91.49 crore. The tribunal has also approved the name of V. Venkatachalam as the interim resolution professional.

“The power firm defaulted on debenture trust deeds that it entered with the fund and the trust in June 2017. The debentures were subscribed by investors in two tranches," said lawyers representing the lenders. “The firm issued 390 debentures upon execution of debenture trust deed in June 2017 and 460 debentures on July 2017 for the aggregate value of 85 crore," they added. The order was given on 9 November but was uploaded on NCLT website on 16 November.

As of 31 March, the firm’s total debt outstanding stood at 3,349 crore, of which IDBI Bank Ltd’s exposure was 41%, or 1,367 crore.

“The said action (default) of the respondent company was neither wilful nor wanton but was due to its inability to access its existing cash flows for payment of coupon as the main trust retention account (TRA) is being managed by IDBI Bank and the secured lenders are not confirming the entire stipulations by the financial creditors," argued the power company. The company said it is expected to revive in the near future as it has a power purchase agreement for the supply of 157MW cross capacity with its captive industrial consumers.

While admitting the insolvency petition for the resolution of the company, Ratakonda Murali, the judicial member of the NCLT, Hyderabad, observed that the default occurred due to various reasons and the company is likely to revive its business. But, “this is not a ground on the basis of which the petition can be rejected". Sai Wardha Power Generation is owned by Hyderabad-based KSK Power Group. KSK Power Group also owns the 2,400MW KSK Mahanadi plant in Chhattisgarh, one of around a dozen power projects that are fighting the Reserve Bank of India circular in the apex court for mandatory resolution of stressed power firms.

“We have filed the said petition in our capacity as debenture trustee in the matter, and since the matter is sub judice, we do not want to comment on your questions," said Vistra ITCL’s compliance officer in an email response to Mint. An email query to Sai Wardha Power and KSK remained unanswered at press time.