Power News We love to talk!

MAY 04 2016

Jindal brothers sign Rs 6,500 crore power deal

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 04th MAY 2016

Billionaire Sajjan Jindal’s JSW Energy Ltd has agreed to buy a 1,000 megawatt power plant from his brother’s heavily indebted Jindal Steel and Power Ltd in a deal valued at up to $976 million, the companies said on Wednesday.

Jindal Steel said the deal, to be completed by mid-2018, would help it meet its liabilities while JSW gained a foothold in coal-rich eastern India through the acquisition of the power plant in Chhattisgarh state.

 The New Delhi-based steel firm majority-owned by Sajjan’s younger brother Naveen will get more than 65 billion rupees ($976.29 million) from Mumbai’s JSW if some conditions on coal supply and power purchase agreements are met, JSW said. JSW would also extend 5 billion rupees as advance against interest.

 “The adverse operating environment within the power sector in the country is driving distress sales in the sector, and JSW Energy’s robust financial health coupled with a strong balance sheet is providing the company an opportunity to acquire quality power assets at reasonable valuations…” JSW said.

While the deal, first reported by Reuters on Tuesday , would help reduce debt at Jindal Steel, it would also be a boon for top lender State Bank of India (SBI) which has been trying to broker an agreement between the companies.

 Indian banks are saddled with a corporate bad debt mountain of about $121 billion.

 Jindal Steel – whose net debt at the end of December was 460 billion rupees, or seven times its current market valuation – had been in talks with lenders including SBI to reschedule repayments due to “cash flow mismatches”.

 The Jindal brothers once competed to buy foreign assets, but Jindal Steel is now struggling after India’s top court cancelled its coal mining licences and a weak commodity market hit margins.

 Buying the plant would help JSW, which called it an “arm’s length” deal supported by independent valuations, in its efforts to nearly triple its power generation capacity to around 12,000 megawatts by early next decade.



Delhi JSW Steel Ltd. JSW Energy Ltd Jindal Steel and Power Ltd Coal Power Generation Energy Bank of India Power Plant Mumbai Power coal mining India SBI

Related News

  • NTPC may exceed capacity addition target of 11,920 MW  Read more
  • Power regulatory panel spares domestic consumers  Read more
  • Govt ready to go it alone on border power projects: Piyush Goyal  Read more
  • Ministry break-in: RIL, Reliance ADAG, Essar, Cairn officials arrested  Read more
  • Indian Oil Corporation buys first shale oil from US as part of crude diversification strategy  Read more
  • Odisha plans Rs. 54,000 crore investment in power sector  Read more
  • Multi-pronged approach required on coal  Read more
  • India and US in WTO face-off over solar power ruling compliance  Read more
  • JSW Energys buyout plans for Bina power plant stuck  Read more
  • NTPC snaps power to BSES discoms  Read more