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Adani Power buys Lanco's Udupi plant for Rs 6,000 cr

India TV Business Desk August 14, 2014 10:35 IST
India TV Business Desk
New Delhi: In one of the largest deals in the thermal power space, Adani Power Ltd, controlled by billionaire entrepreneur Gautam Adani, has acquired Lanco Infratech Ltd's 1,200 megawatt (MW) Udupi power plant in Karnataka in a deal worth Rs 6,000 crore.

While Adani will take over the plant's Rs 4,000 crore worth of debt, Lanco will receive Rs 2,000 crore in cash, which it plans to use for lowering its debt.

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

Udupi is India's first independent power project 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, Lanco adds.

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

Bankers say Adani Power pipped JSW Energy in the negotiations and announced the transaction within two weeks of starting talks. Adani was also in the race for the Jaypee group's hydropower portfolio, but lost out to Anil Ambani's Reliance Power which signed the initial pact for the Rs 12,000-crore deal.

The primary reason for the sellout seems to be the ballooning debt due to the trouble in the power sector due to lack of fuel, low tariffs and distribution bottlenecks.

However, with NDA coming to power, the sector's outlook has improved as it has raised the appetite of potential buyers and prompting some sellers to seek higher valuation for their assets.

At present, Adani Power has an installed generation capacity of about 8,580 MW, with the proposed acquisition help in expanding its portfolio.