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APL to acquire Essar Power’s 1200 Megawatt Mahan Project

Adani Power Limited (APL) which is the country's largest power producer in the private segment, is to buy the 1,200-megawatt (MW) Essar Power's Mahan Project located at Singrauli district of Madhya Pradesh. Resolution Professional of the National Company Law Tribunal (NCLT) issued a Letter of Intent to Adani Power on June 17, informing Adani Group company to file on stock markets.

Essar Power's Mahan power plant supplies power through the Mahan-Sipat transmission line and is also linked with a railway siding 18 km away from the plant for the supply of coal and other raw materials. As per industry sources, Adani Power would shell out close to Rs 3,000 crore for the Mahan Project.

"This is to inform that the Committee of Creditors of Essar Power MP Ltd, a company undergoing insolvency resolution under the Insolvency and Bankruptcy Code, has approved the Resolution Plan submitted by Adani Power Limited," read the proposal by Adani Power.

It added that the closure of the transaction shall be subject to obtaining necessary endorsement from the NCLT and satisfaction of conditions precedent under the Resolution Plan. The development comes at a time when power demand is looking up with the renewal of economic activities as the COVID-19 cases have started coming down in the past few weeks. Adani Group has been on an acquisition spree for power generation possessions across the country. Last month, Adani Group's renewable energy arm Adani Green Energy bought SB Energy's solar and wind power portfolio from Softbank and Bharti Group.

SB Energy's portfolio is comprised of solar projects of 4,180 MW, the wind-solar hybrid capacity of 450 MW, and 324 MW of wind power projects. AGEL has emerged as one of the largest renewable energy firms with an asset portfolio of over 24,000 MW at various stages of development.

Adani Power's thermal project portfolio comprises 12,500 MW of generation capacity spread across Gujarat, Karnataka, Chhattisgarh, Maharashtra, and Rajasthan. It is also commissioning 1,600 MW of project in Jharkhand. The company would further consolidate its leadership position in the power sector with the addition of 1,200 MW of generation assets.

Essar Power's Mahan project that activates two units of 600 MW can be expanded by one more unit to make it a 1,800 MW project. Essar Power commissioned 600 MW units each in late 2012 and mid-2017 respectively.

"In the coming years, we will continue to tap promising business opportunities, while striving to improve our operating efficiencies on all parameters and leveraging our deep experience as well as complementarity with the Adani Group's energy portfolio, to bring about sustainable and profitable growth," Adani Power MD Anil Sardana had stated while announcing company's performance for the fiscal year 2020-21.

The firm’s performance for FY 2020-21 was affected by the sharp drop in demand because a strict nationwide lockdown was imposed to combat COVID-19 last year. Its consolidated total income for fiscal 2020-21 stood marginally higher at Rs 28,150 crore than the revenue of Rs 27,842 crore in 2019-20. Its total comprehensive income after tax was Rs 18 crore for the previous quarter of 2020-21, as compared to the loss of Rs 1,299 crore for the corresponding quarter of 2019-20.

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