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Adani Power To Buy Lanco's Udupi Plant For Rs 6,000 Cr

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Adani Power will acquire Lanco Infratech's 1,200 MW Udupi thermal plant in a deal worth over  Rs 6,000 crore.

The big ticket deal comes less than three weeks after Reliance Power agreed to acquire three hydel projects of Jaypee Group. Adani Power, which is part of diversified Adani Group, was also in the race for those hydro plants.

Adani Power would acquire Lanco Infratech's 1,200 MW imported coal-fired Udupi thermal power plant in Karnataka.

Making the announcement, Lanco Infratech said the deal is "is valued at more than Rs 6,000 crore". It includes Rs 4,000 crore debt component.

Read Also: How R-Power Outbid Adani
"This transaction will support the company in reducing its debt and will enable Lanco to receive about Rs 2,000 crore as cash and additionally, Adani Power will take Udupi plant's long-time debt of around Rs. 4,000 crore," it said in a statement.

While 90 per cent of the electricity generated from the plant is supplied to Karnataka, the remaining is given to Punjab.

According to Lanco Infratech, the Udupi plant is the "first independent power project in the country based on 100 per cent import coal with a captive jetty of four million tons per annum and an external coal handling system in the new Mangalore Port Trust."

The capacity can be, if required, expanded to handle another four million ton capacity, it added.

Lanco Infratech already has signed a pact with Karnataka government for expanding the plant's generation capacity to 1,320 MW.

Lanco, which produces power, builds roads and constructs residential and commercial buildings, in July last year started a process to restructure its $1.3 billion debt after economic weakness hurt some of its core businesses.

It had a net debt of about Rs 36,000 crore ($5.9 billion) at the end of March this year, according to the company website.

The coal-based power plant in Udupi has two units of 600 MW each and imports about 4 million tonnes of coal per year from Indonesia, according to Lanco's website.

Currently, Adani Power has an installed generation capacity of about 8,580 MW. The proposed acquisition would help in expanding its portfolio.

On July 27, Reliance Power had announced it would acquire three hydel plants of Jaypee group.

the Anil Dhirubhai Ambani controlled R-power managed to outbid other big conglomerates like Adani, Tata and JSW to enter in an exclusive deal with Jaypee Power Venture to acquire three of its operational hydro power plants with 1,791 mw generation capacity at a valuation of Rs 12,000 crore.

According to industry sources, Adani group wanted to buy the same project for about Rs 11,000 crore. At the price of quoted by R-Power, it would not have been financially viable for Adanis to repay the debt and make returns on the project.

As on March 2014, Adani Power had a debt of Rs 22,317.20 crore on its balance sheet. Its cash and bank balance were pegged at just Rs 412 crore at the end of FY14.