New Delhi: A recent order passed by the National Company Law Tribunal (NCLT), Ahmedabad bench, has approved Adani Power Limited’s (APL) takeover of insolvent entity Korba West Power Company Limited (KWPCL) having installed capacity of 600 MegaWatt (MW) in Raigarh, Chhattisgarh, while the secured lenders got only 32.84% of their claimed amount.
“Adani Power will endeavour to expand the capacity of KWPCL expeditiously, leveraging its project execution capabilities. Adani Power is also committed to seize further opportunities for capacity addition and provide much needed energy security of India." according to information available on the Adani power website.
APL has been aggressive when it comes to acquisition and expansion of power plants. Before KWPCL, it had acquired GMR Chhattisgarh Energy Ltd. (GCEL), which owns and operates a 1370 MW (two 685 MW) power plant in Raipur District of Chhattisgarh.
With the successful acquisition of these two entities, APL claims to have increased its combined thermal power capacity by 19% to 12,410 megawatts.
These deals are pertinent in understanding the changing scenario of the power sector in our country, especially after Insolvency and Bankruptcy Code (IBC) regime came into force.
For instance, according to conservative market estimations, a new thermal power plant costs around Rs 5 crore per megawatt to set up, which means, for Adani to start afresh 1970 MV (combined capacity of KWPCL and GCEL), it would have cost around Rs 9,850 crore. But, for APL, this capacity expansion was completed with some Rs 7,757 crore.
In KWPCL acquisition, a total of 19 financial or secured creditors, including Axis Bank, claimed an amount around Rs 3,346 crore but got only Rs 1,100 crore, according to the NCLT order. Whereas, the unsecured lenders have been provided 100% of their Rs 1,685 crore claim under the approved plan. It is for the first time in IBC resolutions that a group of unsecured or operational lenders received full claims, but incidentally, APL is one of the unsecured creditors of KWPCL and in its resolution plan, Adani did not specify ‘period of payment’ in its resolution plan.
APL acquired GCEL for an enterprise value of Rs 4,792 crore in July. following the approval of the committee of creditors, it got 52.38% of the equity stake in GCEL from its consortium of lenders and the remaining 47.62% equity stake was acquired from the GMR Group at an enterprise valuation of approximately Rs 3530 crore.
Furthermore, according to the Adani Power website, among the upcoming thermal power plants of Adani include a 1,600 MW in Godda Jharkhand, a 1320 MW plant in Chhindwara in Madhya Pradesh, a 2,640 MW plant in Dahej, Gujarat, and the Adani Group is also planning for expansion of Udupi Thermal Power Station by addition of 1,600 MW (2 X 800 MW) in existing capacity of 1,200 MW through its Udupi Power Corporation Limited.