Aditya Birla group plan to enter power sector stymied

The Aditya Birla Group's plans to re-enter the power sector have had a setback, as its move to buy into a Chhattisgarh-based power unit has fallen apart.

According to sources, the AB Group was very close to purchasing Sona Power, which had plans of putting up a 660-Mw power project in Chhattisgarh. However, the deal hasn’t gone through, due to the high valuation quoted by the promoter and troubles related to coal linkage for the project.

The project had coal linkage for 660 Mw, but ABG wanted to expand this capacity twice over, for which extra coal was required. But this could not be had.

When asked, an Aditya Birla spokesperson said the company, as a policy, did not comment on market speculation. The management of Sona Power could not be reached.

The value of the deal was pegged at Rs 300 crore. It it had gone through, it would have been similar to GMR's acquisition of Emco Power in 2009, where a company with a licence to set up a new project was bought.

ABG had sold its power assets a few years before, Since 2010, it has tried to re-enter the sector. It sold the Rosa power project in Uttar Pradesh to Reliance Power, which has commissioned 600 Mw of its 1,200 Mw capacity. ABG also sold the 1,500-Mw Bina power plant in Madhya Pradesh to the Jaypee group in 2007. Phase-I of this project is expected to be commissioned this year.

"These are very promising assets they have exited from. It looks like the group is repenting. They have been trying hard to get back into the business and looking at greenfield (new) projects. They could even consider bidding for a few projects," said an analyst, who declined to be named.

The group already has experience in the construction and operation of power projects, as it has huge captive capacities as a part of its metals and mining business, Hindalco.

Its captive power plant at Renusagar (UP) has a generation capacity of 742 Mw, operating at a capacity of over 90 per cent. Renusagar also has two co-generation plants of 37.5 Mw and 41 Mw each. The company is also developing a 100 Mw power plant at Hirakud, where it is currently doubling its smelter capacity.