Adani Power, which is a wholly-owned subsidiary of the Adani Group, has recently received the creditor’s approval for its plan to acquire the insolvent Lanco Amarkantak Power Plant. The conglomerate has long been in discussion with some of the officials of the Lanco Amarkantak Power Plant regarding the acquisition of the plant, and it has finally received approval for its resolution plan. This is a big step for the Adani Group towards acquiring greater control over the power sector of India. It also allows the business group to increase its overall power production capacity. The Adani coal mines were already contributing to the power generation of the country. With this plant coming under the control of the Adani Group, the conglomerate’s power portfolio would further increase.
The Lanco Amarkantak Power Plant:
Lanco Amarkantak Power operates two 300 MW units of thermal power each in the Korba district of Chhattisgarh. The asset has a total capacity of 600 MW, which is tied up under the long-term power purchase agreement with the state distribution companies of Madhya Pradesh and Haryana. The power plant was admitted for corporate insolvency proceedings in 2019, but the resolution was delayed for various reasons. Later, when lenders restarted the sale process, big names like Adani Power, Reliance Industries and the PFC-led consortium showed interest in the acquisition.
As per earlier reports, a consortium led by Power Finance Corporation and Reliance Industries Limited later decided not to participate in the auction of the debt-ridden power company. This gave the Adani Group a clear path to acquiring the power plant. With this acquisition, the Adani Group will become one of the biggest power holders of recent times. It will also offer our country excellent growth, especially in the power sector.
Adani’s Interest in The Power Sector:
The Adani Group has always been interested in India’s power sector. Since its initial days, it has been working on expanding the Adani coal mines. The company had earlier shared plans to increase its power generation capacity to 21,150 MW from the current 15,250 MW. It is planning to do so by introducing a mix of various organic and inorganic expansion options. This will ensure that our country’s power requirements are met and that there is a consistent supply of power even in the remote regions of India. One of the senior professionals of the Adani Group has recently mentioned that the expansion plan includes the acquisition of 1.1 GW in recent months.
In December 2023, Adani Power had a gross debt of INR 31,162 crore, lower than INR 42,353 at the end of the last financial year. This is an incredible recovery made by the Adani Group in the power sector. It plans to continue to look for opportunities to repay all these loans. Although no written policy has been finalised yet, the company will look to reduce the high-cost borrowing whenever there is surplus cash flow. This will ensure that the business operations get carried out smoothly and consistently without the slightest hindrance at all.
Acquisitions Made Through the Insolvency Resolution Process:
The Adani Group is already on an aggressive journey towards increasing its power generation capacity, and this is the company’s second acquisition during this financial year under the insolvency resolution process. We expect the organisation to be a part of more such acquisitions in the upcoming months as well. The committee of creditors of the Lanco Amarkantak Power Plant has offered its approval for the resolution plan, which Adani Power submitted. The company has recently received a Letter of Intent from the resolution professional regarding the acquisition of the Lanco unit.
The asset was submitted for the resolution process for the first time in 2019, and since then, a lot of progress has been made in this issue. Adani Power, however, has not disclosed its bid value. This is Adani Power’s second acquisition in the financial year through the insolvency process. In December 2023, Adani Power also received a Letter of Intent from the resolution professional of Coastal Energen. A bid was placed for INR 3,450 crore by Adani Power, which ultimately became the winning bid. This asset has two units of 600 MW power capacity in Tamil Nadu.
Conclusion:
India’s power demand has been continuously on the rise over the past few years, bringing coal-fired power assets back into this sector. The Adani coal mines have a big role to play in ensuring that the power demands are met. The enhanced power supply will also ensure that industrial activities take place at full force and that our country walks the path of prosperity.
