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Adani Power shifts Mundra unit to subsidiary

Plant has been a drag on firm's performance

Amritha Pillay  |  Mumbai 

Mundra
The transfer, which is to be executed on a going concern basis, will provide Adani Power a cleaner platform to source funds for expansion and acquisitions.

The board of directors of on Tuesday approved the transfer of its Mundra (Kutch) to a separate subsidiary, (Mundra) Ltd, through a slump sale (slump sale is a transfer of a whole or part of business concern as a going concern).

“The company’s board has considered and approved the slump sale of its Mundra power business undertaking, generating 4,620 Mw of power, to its subsidiary company, namely (Mundra),” said in a statement. 

The Mundra plant has been a drag on Adani Power’s performance for the past few years due to higher input costs. The unit was dealt a blow when the Supreme Court disallowed compensatory tariffs for changes in international laws. 

runs the Mundra plant on Indonesian coal, prices of which rose due to a change in Indonesia’s import policy, making operations unviable.

In its statement, said the plant would be transferred to the subsidiary along with liabilities. The release added the revenue of the plant was Rs 11,017 crore in 2016-17. 

The transfer will not involve any cash. Sources peg the Mundra plant’s standalone debt at Rs 15,000 crore. 

Analysts expect to consider a strategic debt restructuring (SDR) or S4A for the Mundra subsidiary. However, the said the decision was intended to separate its investment business from the power generation business. 

“The characteristics of risks, growth, funding requirements and cash flows involved in the company’s two activities — investments and power generation — are quite distinct,” the statement said. 

The transfer, which is to be executed on a going concern basis, will provide a cleaner platform to source funds for expansion and acquisitions. 

added it had not sought listing for the subsidiary and there would not be any change in the shareholding pattern of The sale is subject to statutory and regulatory approvals.

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Adani Power shifts Mundra unit to subsidiary

Plant has been a drag on firm's performance

Adani Power Ltd's Board on Tuesday approved the transfer of its Mundra power plant asset to a separate subsidiary Adani Power (Mundra) Ltd on a slump sale basis." The company's board has considered and approved the slump sale of its Mundra power generating business undertaking generating 4620 megawatt of power to its subsidiary company namely Adani Power (Mundra) Ltd," the company said in its statement on Tuesday. The company's Mundra asset has been a drag on the company's financial performance for the past few years due to higher input costs. The Mundra unit was dealt a bigger blow when the Supreme Court decided to not allow for any compensatory tariff on the grounds of change in international laws. Adani Power runs the Mundra unit on Indonesian coal, prices for which rose due to change in Indonesia's import policy, making the plant's operations financially not viable.In its statement, the company said, the asset will be transferred to the subsidiary along with its liabilities. The ..
The board of directors of on Tuesday approved the transfer of its Mundra (Kutch) to a separate subsidiary, (Mundra) Ltd, through a slump sale (slump sale is a transfer of a whole or part of business concern as a going concern).

“The company’s board has considered and approved the slump sale of its Mundra power business undertaking, generating 4,620 Mw of power, to its subsidiary company, namely (Mundra),” said in a statement. 

The Mundra plant has been a drag on Adani Power’s performance for the past few years due to higher input costs. The unit was dealt a blow when the Supreme Court disallowed compensatory tariffs for changes in international laws. 

runs the Mundra plant on Indonesian coal, prices of which rose due to a change in Indonesia’s import policy, making operations unviable.

In its statement, said the plant would be transferred to the subsidiary along with liabilities. The release added the revenue of the plant was Rs 11,017 crore in 2016-17. 

The transfer will not involve any cash. Sources peg the Mundra plant’s standalone debt at Rs 15,000 crore. 

Analysts expect to consider a strategic debt restructuring (SDR) or S4A for the Mundra subsidiary. However, the said the decision was intended to separate its investment business from the power generation business. 

“The characteristics of risks, growth, funding requirements and cash flows involved in the company’s two activities — investments and power generation — are quite distinct,” the statement said. 

The transfer, which is to be executed on a going concern basis, will provide a cleaner platform to source funds for expansion and acquisitions. 

added it had not sought listing for the subsidiary and there would not be any change in the shareholding pattern of The sale is subject to statutory and regulatory approvals.

graph

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Business Standard
177 22

Adani Power shifts Mundra unit to subsidiary

Plant has been a drag on firm's performance

The board of directors of on Tuesday approved the transfer of its Mundra (Kutch) to a separate subsidiary, (Mundra) Ltd, through a slump sale (slump sale is a transfer of a whole or part of business concern as a going concern).

“The company’s board has considered and approved the slump sale of its Mundra power business undertaking, generating 4,620 Mw of power, to its subsidiary company, namely (Mundra),” said in a statement. 

The Mundra plant has been a drag on Adani Power’s performance for the past few years due to higher input costs. The unit was dealt a blow when the Supreme Court disallowed compensatory tariffs for changes in international laws. 

runs the Mundra plant on Indonesian coal, prices of which rose due to a change in Indonesia’s import policy, making operations unviable.

In its statement, said the plant would be transferred to the subsidiary along with liabilities. The release added the revenue of the plant was Rs 11,017 crore in 2016-17. 

The transfer will not involve any cash. Sources peg the Mundra plant’s standalone debt at Rs 15,000 crore. 

Analysts expect to consider a strategic debt restructuring (SDR) or S4A for the Mundra subsidiary. However, the said the decision was intended to separate its investment business from the power generation business. 

“The characteristics of risks, growth, funding requirements and cash flows involved in the company’s two activities — investments and power generation — are quite distinct,” the statement said. 

The transfer, which is to be executed on a going concern basis, will provide a cleaner platform to source funds for expansion and acquisitions. 

added it had not sought listing for the subsidiary and there would not be any change in the shareholding pattern of The sale is subject to statutory and regulatory approvals.

graph

image
Business Standard
177 22