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Coronavirus puts JSW\'s acquisition of GMR power project on ice
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Sajjan Jindal-owned JSW Energy has put on hold its acquisition of debt-laden GMR Kamalanga Energy Ltd from GMR Energy in the pandemic.

After discussions since October last year, the power arm of JSW Group had entered into an agreement with GMR Energy in February to acquire 100% stake in the latter’s Odisha-based subsidiary GMR Kamalanga for Rs 5,321 crore ($745 million).

The all-cash deal value of Rs 5,321 crore for the asset had included the takeover of existing debt worth Rs 3,951 crore, and a payment of Rs 1,370 crore to the promoters, of which Rs 755 crore would be paid upfront while the balance Rs 615 crore would hinge on milestones.        

The acquisition would have helped JSW Energy to increase its total installed power generation capacity to 5,609 megawatt (MW). 

This would have expanded the company’s presence in the eastern region of the country and further helped to diversify its fuel mix and offtake arrangements.

Established in December 2007, GMR Kamalanga owns a 1,050 MW (3x350 MW) coal-based plant in Odisha. 

It has fuel linkages with Coal India and long-term power purchase agreements with Gridco (Odisha), Uttar Haryana Bijli Vitran Nigam, and Bihar State Electricity Board.

JSW Energy is also awaiting approval from the bankruptcy tribunal for another planned acquisition of a plant in Odisha: Ind-Barath Energy (Utkal).

In January this year, JSW Energy bought an equity stake in debt-laden Jaiprakash Power Ventures Ltd, part of the Manoj Gaur-led Jaypee Group, as part of an exercise to restructure its loans to the debt-laden company.

Last year, it had scrapped a deal it had signed three years ago to acquire a 1,000-MW thermal power plant in Chhattisgarh from Jindal Steel & Power Ltd.

In the January to March quarter, JSW Energy’s revenues and net power generation fell even as profits soared.

Its total revenue declined 8% year-on-year to Rs 1,848 crore (from Rs 2,018 crore a year ago) due to lower long-term sales and decline in fuel cost. 

However, it reported a whopping 28-fold jump in its consolidated net profit to Rs 108.44 crore in the quarter ended March due to gains from a tax write-back and improvement in operating profit margin of almost 6 percentage points. 

JSW Energy’s net profit for 2019-20 was Rs 1,100 crore, a 58.27% rise compared with Rs 695 crore a year ago.

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