GMR Energy Ltd (GEL) said on Friday it has entered into definitive agreements with Adani Transmission Ltd (ATL) to sell transmission projects Maru Transmission Services Ltd (MTSL) and Aravali Transmission Services Ltd (ATSL).
To begin with, 74% stake in MTSL and 49% stake in ATSL shall be transferred to Adani with an option to the Ahmedabad-based group to acquire the balance stake in both the projects.
ATSL operates 400 KV S/C Hinduan-Alwar transmission line (96 kms) and 2x315 MVA, 400/220 KV grid substation at Alwar and other associated work in Rajasthan. The project was awarded on a build own operate maintain (BOOM) basis and commissioned in July, 2014.
MTSL operates 400 KV S/C Bikaner-Deedwana transmission line which is approximately 129 kms long; 106-km long 400 KV S/C Ajmer-Deedwana transmission line; 30-km long 220 KV D/C Sujangarh-Deedwana transmission line and 2x315 MVA, 400/220 KV grid sub-station at Deedwana and other associated work in Rajasthan. The project was commissioned in December, 2013.
The equity consideration for 100% stake of both the projects is Rs 100 crore. The total value realisable for GEL could be Rs 220 crore considering this equity consideration and the expected upside of up to Rs 120 crore from regulatory proceeds of various appeals of the assets, GEL, a subsidiary of GMR Infrastructure Ltd (GIL), said.
These assets were awarded through a tariff based competitive bidding process with a licence period of 25 years, further extendable by 10 years.
The total debt in the projects as on March 31, 2016 was Rs 324 crore. This is a small component of the heavy debt pile on GMR Group's various companies.
GBS Raju, business chairman – energy, GMR Group, said “GMR Group continues on the path of asset light asset right strategy. The deal will release further liquidity and deleverage the GMR balance sheet.”
For Adani Transmission this comes as additional assets close to its existing project. It is developing another transmission line from Suratgarh to Bikaner in Rajasthan, in close proximity to these assets.
Gautam Adani, chairman of Adani Group, said, “Adani Transmission Ltd is foreseeing significant growth in the transmission sector and expects to maintain its leadership position in the country. This acquisition is in sync with the long-term strategy of ATL wherein we are always looking to create value for our stakeholders.”
Adani Transmission is the largest power transmission company operating in the private sector in India and owns, operates and maintains around 5,000 kms of transmission lines. It has four operational transmission systems that serve the northern and western regions of India and is also constructing additional projects of around 1,900 kms in Rajasthan, Chhattisgarh, Madhya Pradesh, Maharashtra, Jharkhand and Bihar. With completion of all ongoing projects and this acquisition, the network is expected to increase to 7,300 kms.
Last November, state-run Power Finance Corporation had transferred three step-down subsidiaries, set up to execute electricity grid projects, to Adani Transmission.
As part of a group restructuring , Adani Enterprises Ltd had spliced out its transmission business into a separate firm while demerging its Belekeri Port in Karnataka into listed arm Adani Ports and Special Economic Zone and a small solar power unit in Kutch, Gujarat, to Adani Power.
Post-restructuring, the entire power generation business is housed under Adani Power and the entire ports business is under Adani Ports. Adani Enterprises has become a mining firm by merging its existing unit Adani Mining Pvt. Ltd with itself.
Like this report? Sign up for our daily newsletter to get our top reports.