Sajjan Jindal's JSW Energy sole bidder for Monnet Power as Adani backs out

JSW had earlier made an offer outside of the IBC process but lenders were not keen to take a steep haircut

Billionaire Sajjan Jindal’s JSW Energy has submitted a bid for Monnet Power, which was referred to the National Company Law Tribunal (NCLT) after it defaulted on Rs 55 billion debt. Adani Power, which submitted an expression of interest earlier, has decided to stay out of the race.

Monnet Power runs a 1,050 Mw thermal power unit in Odisha and is supplying power to Monnet Ispat, acquired by JSW Steel in July for Rs 37.50 billion as against its dues of Rs 114 billion to banks. Both companies were set up by the Jajodia family, who are related to the Jindals by marriage. The two firms defaulted on bank loans, leading to the Insolvency and Bankruptcy Code (IBC) proceedings against them.

A senior executive of JSW said the bid had been made to the lenders on Wednesday and the company might take over less than 50 per cent of Monnet’s debt.

Indian lenders are taking an average 50 per cent haircut in the IBC cases and have received 100 per cent offer only in the case of Binani Cement, recently acquired by UltraTech Cement.

When contacted, an Adani Power executive confirmed that it had not submitted a financial bid for Monnet Power after expressing its interest in June. But Adani is in the last lap to take over a 1,370 Mw power project of GMR Infrastructure Chhattisgarh and plans to take over the company’s Rs 38 billion debt as against Rs 58 billion of dues.

This is the second time JSW is making an offer for Monnet Power. According to a source, JSW had earlier made an offer outside of the IBC process but the lenders were not keen to take a steep haircut. Once the company was referred to the IBC along with 40-odd companies by the Reserve Bank of India, JSW Energy decided to submit its bid. State Bank of India, Punjab National Bank, UCO Bank and IDBI Bank were the top lenders to Monnet Power.

Indian lenders say any resolution in the power sector is good news for them as Rs 1.8 trillion of debt to the sector is on the verge of becoming non-performing assets (NPAs). A circular issued by the Reserve Bank of India in February 12 had banned loan restructuring of any projects in India. This has led to several power projects becoming unviable. A petition filed by the power producers’ association is pending in the Supreme Court. Tata Power has recently won the race to acquire Prayagraj Power, earlier owned by the Jaypee group, which had defaulted on debt worth Rs 110 billion.