JSW Energy has agreed to acquire a 1,050 megawatt (MW) coal-fired power plant in Odisha from GMR Energy Ltd for a total consideration of ₹5,321 crore.
The acquisition of GMR Kamalanga Energy Ltd is expected to close in three months, subject to the receipt of regulatory clearances, JSW Energy said in a regulatory filing on Monday.
JSW Energy’s total installed power generation capacity will increase to 5,609MW after the transaction. It will also expand the company’s presence in the eastern region and diversify its fuel mix and offtake arrangements, JSW said.
The plant, in Odisha’s Dhenkanal district, has three units of 350MW each. Of its total generation capacity, 84% is tied-up in long-term power purchase agreements with state electricity distribution companies in Odisha, Haryana, and Bihar while the remainder is available for merchant sale.
The plant’s strategic location in coal-rich Talcher belt in Odisha ensures low variable costs, thereby placing the facility favourably in merit order dispatch (with low tariffs), JSW Energy said. The plant’s power purchase agreement tariffs range between ₹2.89 a unit and ₹3.39 a unit. The power plant had reported revenues of ₹2,195 crore in FY2019 and ₹1,990 crore in FY2018.
As part of the transaction, JSW Energy will take on the plant’s debt of ₹3,951 crore. Part of the remaining consideration of ₹755 crore will be paid upfront in cash, while ₹615 crore will be through staggered payments on achieving certain milestones. JSW Energy has made the acquisition at 5.1-5.9 times its expected earnings for FY21.
JSW Energy generates 4,541MW, comprising 3,140MW thermal power, 1,391MW hydropower and 10MW solar power.
GMR Energy is a subsidiary of GMR Infrastructure Ltd. In a separate exchange filing, GMR Infrastructure said the transaction will help the company reduce its debt by ₹4,141 crore.
The Kamalanga plant was one of the first few independent power plants commissioned in India under the mega power policy.
“As we rebalance our portfolio, divestment of GMR Kamalanga will help reduce the indebtedness of our group and strengthen our balance sheet. It will also help release significant management bandwidth to focus our energies on new growth areas," said Srinivas Bommidala, chairman, energy and international airports, GMR Group.