Monnet Ispat in talks to sell part of power arm

Monnet Ispat & Energy is in preliminary talks with potential buyers for selling partial stake in its power business, Monnet Power Company, which has significant liabilities.
While the identities of the potential buyers were not disclosed, reports suggest that Adani and JSW groups are in the race.
"The Company is at preliminary stage of discussion with few buyers to explore sale of its part stake in Monnet Power Company Limited," Monnet Ispat & Energy (MIEL) said.
Without naming the buyers, it said in a filing to the BSE that "the discussions are at an initial stage and the deal, if fructified, is subject to the due diligence and agreement on the commercial and other terms and conditions".

After reports that groups like Adani and JSW are in race to buy controlling stake in Monnet Power for over Rs 3,000 crore, Monnet Ispat informed the BSE that "whenever any such development happens, the Company will inform the Stock Exchange In compliance of the listing agreement".
A person privy to the development said, "Adani Group has received the proposal from Monnet. As it has closed the Udupi deal recently, no decision has been taken yet on this proposal." It had acquired 1,200 MW Udupi power plant from Lanco Infra.

An Adani spokesperson declined to comment on the issue.
When contacted, a JSW spokesperson said the company was not doing any due diligence for assets of Monnet Power.

"We continue to evaluate various growth opportunities; however, the Company is not in any conclusive discussions for any particular project," he said.
"JSW Energy, as part of its growth strategy, looks to evaluate opportunities for growth, both organically and inorganically," the spokesperson added.
MIEL has been an Independent Power Producer (IPP) through its subsidiary Monnet Power Company Limited (MPCL) by setting up a thermal power plant of IPP of 1050 MW, backed with pit head captive coal mine in Angul, Odisha. The company claims that the project will be amongst one of the lowest cost generation units.
The company is also setting up additional super critical 660 MW power plant at the same site and is fully equipped in terms of the land requirement and fuel for the same.

As per sources, the proposed sale aims at reducing debt of Monnet Power which stood at Rs 4,000 crore in March 2014.
However, Monnet Ispat officials did not respond to repeated queries in this regard. Monnet Power has faced "challenges of delayed disbursals, late approvals and...Land acquisition in the beginning resulting in time & cost over-run of the project. The revised Cost of Project is pegged at Rs 7,117 crore instead of Rs 5092 crore earlier," the company's annual report said.
"Similarly, the COD of the Project has been revised to September 2015 instead of December 2012 earlier, with unit-I expected to be commissioned by March 2015 and unit-II by September 2015," it added.

The company scrip closed at Rs 53.65, up 2.19 per cent, on the BSE.