CLP India has entered into an agreement to buy three power-transmission assets from Kalpataru Power Transmission, for Rs 3,275 crore, the two companies announced on Wednesday.
CLP will purchase equity stake in three Special Purpose Vehicles, which own the three transmission assets. Completion of the deal is linked to milestones, including achieving the commercial operation date for some of these.
The three assets comprise Kalpataru Satpura Transco in Madhya Pradesh, Alipurduar Transmission in Bihar and West Bengal, and Kohima Mariani Transmission, part of the Manipur-Nagaland-Assam stretch.
“This marks CLP India’s entry into the power transmission sector. With this, we have broadened our portfolio to straddle two out of the three main segments in India’s power value chain,” CLP said.
For Kalpataru, the sale is part of a larger strategy to divest from non-core assets. “Our focus would be to unlock value from non-core assets and focus on EPC (engineering, procurement, construction) contracting, which has grown at a 20 per cent compounded annual rate in the past five years,” said Manish Mohnot, managing director. Their current consolidated order book stands at Rs 25,000 crore. On completion of the deal, Kalpataru will own one transmission asset. It said it was also looking to exit from its residential real estate business in Indore by the next financial year.
Kalpataru’s consolidated debt is Rs 3,300 crore; on the deal's completion, this is expected to be Rs 500-1,000 crore. “I expect cash flows to start coming from the deal by the third quarter of the current financial year and continue up to the third quarter of the next financial year,” Mohnot added.
Kalpataru is also open to divesting its stake in Shree Shubham Logistics. “We are open to looking for a strategic buyer and sell at the right time, while we focus on improving the company’s financials,” said Mohnot.
CLP India had hired Shardul Amarchand Managaldas for legal advice on this transaction.