JSW Energy all set to acquire Bina thermal power from JP Power for Rs 3,500 crore

NEW DELHI: After agreeing to acquire its hydropower assets, Sajjan Jindal is again bailing out cash-strapped Jaypee Group. Jindal’s power flagship, JSW Energy, is all set to acquire Bina Thermal Power from Jaiprakash Power Ventures for about Rs 3,500 crore.

The power plant has an installed capacity of 500 megawatt and sufficient infrastructure to ramp it up to 1,500 MW with marginal investment, two people familiar with the matter told ET. The two sides have agreed on the broad contours of an agreement on Monday in New Delhi, they said.

"JSW has already completed the due diligence and is expected to enter into a binding agreement shortly," one of the people said. After the completion of the first deal for the two hydropower plants, the two sides would start focusing on Bina Power and should close that too within the next few days, this person said.




AJSW Energy spokesperson declined to comment. Emails sent to JSW Energy and Jaiprakash Power Ventures went unanswered. Once completed, this would be the third acquisition by JSW Energy in the past one year that would almost double its power generation capacity to 6,000 MW from the current 3,140 MW. Another 8,630 MW of capacity is under development.

Last November, JSW Energy signed a definitive agreement with Jaypee to acquire two hydropower plants for Rs 9,700 crore. These were the 300 MW Baspa-II and the 1,091 MW Karcham Wangtoo projects, both in Himachal Pradesh. In addition to these assets, JSW Energy signed a non-binding agreement to purchase a majority stake in the power arm of Monnet Ispat & Energy with a combined capacity of 1,050 MW. JSW Energy is a part of the $11-billion revenue JSW Group, controlled by billionaire Sajjan Jindal.

The Jaypee Group had acquired the Bina unit in Madhya Pradesh from the Aditya Birla Group. The unit supplies most of its output to the MP State Electricity Board under a long-term power purchase agreement. Around 30% is sold in the spot market. Most independent power producers in India, saddled with huge leverage and weak cash flows, are trying to sell at least some of their assets.

HEALTHY BALANCE SHEET

JSW Energy, which had consolidated debt of Rs 8,210.6 crore as on March 31, is one of the few power companies in India that have a healthy balance sheet, allowing it to raise funds easily to pursue its plan to buy distressed assets. The company already has sought shareholders' approval to raiseRs 12,500 crore this year, of whichRs 5,000 crore is for ongoing capital expenditure and Rs 7,500 crore for organic and inorganic growth.

The company has also been in talks with banks to refinance debt worth Rs 6,000 crore under the socalled 5/25 refinance scheme for long-gestation infrastructure projects. It has been planning to refinance the debt component of the two Jaypee hydro plants. Under the 5/25 scheme, banks can extend loan repayment periods up to 25 years, with an option of refinancing the loan every five years.

The Jaypee group — one of the most indebted conglomerates in the country — has been on an asset monetisation drive in the recent past with an effort to pare its group debt to about Rs 55,000 crore. It has sold several of its cement, power plants and land parcels. Jaypee’s sale of its cement plants in Madhya Pradesh to the Aditya Birla Group’s UltraTech Cement for Rs 5,400 crore is awaiting regulatory sign-off on the transfer of limestone mines. So far, the group has divested assets worth Rs 21,638 crore. After Bina, the total figure will cross Rs 25,000 crore. Jaiprakash Power operates also a 1,320 MW thermal power plant at Nigrie, Madhya Pradesh.