Both sides signed an agreement for the all cash deal on Friday afternoon. The initial term of the MOU shall be till completion of the acquisition October 31, 2022, which may be extended by mutual agreement.
ET broke the story online on Friday evening, before the formal announcement.
DB Power has 2 units of 600 MW each of thermal power in Janjgir-Champa district, Chattisgarh. Dainik Bhaskar’s power business comes under a separate holding company — Diliigent Power Private Limited (DBPL) that owns 83.87% in the company. PE fund Global Infrastructure Partners (GIP) holds 16.13%).
Diligent Power as per a CARE Ratings report from August 2021, is held by ‘Writers & Publishers Private Limited’ and other individual promoters (collectively holding 54.46%), Warburg Pincus (19.22%) and TRG (The Rohatyn Group ) that owns another 26.32%. It has extended corporate guarantee and promoter support undertaking to the lenders of DBPL. The day-to day operation of DBPL are managed by a team of highly qualified and professionals headed by Mr. Girish Agarwal.
DB Power has long and medium-term Power Purchase Agreements for 923.5 MW of its capacity, backed by Fuel Supply Agreements with Coal India Limited, and has been operating its facilities profitably. Global coal prices has cool off a bit after trebling in the past year, sending the coal import bill in May higher by 156 per cent in the year to $10.2 billion.
The company clocked a turnover of Rs 3,488 crore (for FY 2021-22). In FY21, its PAT was Rs 312 crore. It has around Rs 5500 crore debt. At this valuation, the deal translates to Rs 6 crore/MW, among the highest in the sector in recent times.
The company benefits from the low cost of generation due to timely procurement of coal through fuel supply agreement (FSA) and auctions, proximity to coal mines and own railway siding facility. This has resulted in an increase in the earnings before interest, taxes, depreciation and amortisation (EBITDA) to Rs 1,504 crore during fiscal 2022 as compared to Rs 1,263 crore the previous fiscal. Operating performance is expected to sustain driven by adequate capacity tie-ups over the medium term and high power demand, said Crisil report
Arpwood was the advisor to the deal.
The company executed Power Purchase Agreements (PPAs) with Rajasthan discoms for 311 MW for 25 years, Tamil Nadu Generation and Distribution Company Limited (TANGEDCO) for 208 MW for 15 years and Chhattisgarh State Power Trading Company Limited (CSPTL) for 60 MW for 25 years.
The total tied-up capacity of DBPL increased to 76% during fiscal 2022 from 59% in fiscal 2021 with the signing of a new medium term PPA each with PTC India Ltd and Manikaran Power Ltd (MPL) for 150 megawatt and 50 MW power supply to TANGEDCO and Gujarat Urja Vikas Nigam Ltd (GUVNL), respectively. These PPAs have been signed at a tariff of Rs 4.04 per unit and Rs 3.18 per unit, respectively, while the cost of generation is low due to proximity to coal mines, said a recent Crisil report.
Besides, the company also has a long-term PPA of 360 MW with Chhattisgarh (CG), supplies under which are yet to commence. It demonstrated a healthy track record of generation despite only 76% of its installed capacity having PPAs. Plant load factor (PLF) improved to 82% in fiscal 2022 from 78% the previous fiscal, driven by higher demand.
Earlier, Resurgent Power – the platform set up by Tata Power, Caisse de dépôt et placement du Québec (CDPQ) and ICICI Venture, was in talks to buy the assets of Diligent Power Ltd.
Operating performance of the company has improved during fiscal 2022 with plant load factor (PLF) increasing to 82% from 78% the previous fiscal, while the plant availability factor remained above normative levels. This is driven by additional medium term power purchase agreements (PPAs) of 200 MW with PTC India Ltd and Manikaran Power Ltd (MPL) and healthy sales in the short-term market through bilateral contracts as well power exchanges.
Adani Power’s current market capitalisation is around Rs 1,58,983.02 crore. The stock ended at Rs 412.20 a piece up by Rs 12.80 on Friday.
In Q1FY23, the Adani flagship reported a 1,619% rise in consolidated profit after tax (PAT) jumped to Rs 4,780 crore compared with Rs 278 crore in the corresponding quarter last year.
Total income climbed to ₹15,509 crore more than double of ₹7,213.21 crore recorded in the Q1 of FY22. Consolidated EBITDA for Q1FY23 came in at ₹7,506 crore vs ₹2,292 crore in the year-ago period, a rise of 227%.