Jindal Power currently has a 1,000mw power plant with another 6,500mw under implementation, besides substantial interests in hydro and wind.
Jindal Power Ltd, the unlisted energy arm of Jindal Steel and Power Ltd (JSPL), is looking to acquire thermal plants in India that are under implementation.
“We want to increase our power generation capacity faster than intended, so we are looking at power plants which have been under implementation for the last 2-3 years. We will buy them out and take it forward from there,’’ said Sushil Maroo, group chief financial officer, JSPL and head of Jindal Power.
Jindal Power currently has a 1,000mw power plant with another 6,500mw under implementation, besides substantial interests in hydro and wind.
Maroo told DNA on Wednesday that the company is open to acquiring any upcoming thermal power plant which is above 1,000 mw. The plant should have land and other clearances in place along with coal linkages, which will leave the company with only completing the construction work and starting operations.
While acquisition of power plants is not very common in India, Kameswara Rao, executive leader - utilities and mining, PricewaterhouseCoopers, said, Jindal Power’s move could trigger a trend wherein bigger companies with strong cash back-up will look at taking over power plants under implementation.
“Overseas coal has become costlier due to policy issues in Australia and Indonesia. Also, there has been no new coal block allocation since 2009, as a result setting up of new power projects has become difficult in the last two years,’’ said Rao.
He said while assets are not highly priced currently, they are still available at competitive rates and Jindal Power’s move could eventually lead to interesting trends coming up in the power sector.
Maroo said Jindal Power has not set aside any target or capital for its proposed acquisition and is open to any opportunity that comes up as the company has strong cash flows. However, not much is happening on the proposed Rs7,000 crore initial public offering of Jindal Power which was planned two years ago.
“The DRHP (draft red herring prospectus) expired in May 2011 and since then the board has not considered anything on that front,’’ he said.
Rao from PwC said though merchant power rates are not as good as earlier but that will not lead to valuations of power plants coming down as the country is highly power deficit.
The last such major buyout was when Hyderabad-based infrastructure major GMR bought out transformer manufacturer Emco’s under-construction 600 mw power plant near Nagpur.
Though the financials of the deal were not known, experts say the deal was done at sky-high valuations.
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