Tata Power acquires Ideal Energy's 540 MW thermal plant

With this, the company's generation capacity increases to 8,885 Mw

Tata Power has said it has signed a share purchase agreement with Ideal Energy Project (IEPL) to acquire the latter’s 540-Mw thermal power plant near Nagpur in Maharashtra for an undisclosed amount. With this acquisition, the company's generation capacity increases to 8,885 Mw.

IEPL is promoted by the Mhaiskar family of IRB Infrastructure Developers. It has been on the block since 2011. However, the sale was stuck because of the controversy surrounding the then Bharatiya Janata Party (BJP) president Nitin Gadkari, and his relationship with IRB Infrastructure Developers and its founders, the Mhaiskar family.

IEPL finally commissioned 270-Mw capacity in May 2013. According to analysts’ estimates, this acquisition would cost the company Rs 3,500 core.

The acquisition comes at a time when Tata Power is exploring a joint venture partnership with ICICI Securities to buy out troubled power assets.

The latest acquisition will increase the company’s spread in thermal power space.

Tata Power has a total operational capacity of 8,613 Mw, which includes 7,647 Mw of thermal power. Another 800 Mw generation capacity is under execution and most of it is renewable energy space.

Tata Power reported a consolidated net loss of Rs 260 crore ( including share of minority interest )  in FY14, its second highest in the past 10 years.

“It is our constant endeavour to maximise stakeholder value in line with our vision,” said Anil Sardana managing director and CEO of Tata Power.

The firm has set a target of generating 18,000 Mw by 2022 and has projects of 3,000 Mw capacity under various stages of execution. Tata Power shares rose 1.7 per cent to Rs 86.85 apiece on the BSE on Wednesday, while the benchmark Sensex gained 0.15 per cent to 27,837.87 points.

In 2007, Tata Power had bought a 30 per cent stake in PT Kaltim Prima Coal and PT Arutmin Indonesia (Arutmin) and the related trading company owned by PT Bumi Resources for Rs 4,740 crore. Tata Power has lost the motivation to continue with its investment in Indonesian coal mines as international coal prices dropped.

The company sold a five per cent stake in the Kaltim Prima Coal mines along with a 30 per cent stake in related power infrastructure companies in July for $250 million.

It can sell the remaining 25 per cent stake in the coal mines, which is valued at a little over $1 billion ( Rs 6,000 crore). This could be of help if the company decides to raise capital for acquisition.