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On Friday, Adani Power and DB Power reached an agreement to be merged. DB Power owns and runs a functioning 2×600 MW thermal power plant in the Chhattisgarh district of Janjgir Champa. With this acquisition, the Adani Group-backed power flagship will increase its activities and product offerings in the state’s thermal power industry.
DB Power will be purchased by Adani Power for a total enterprise value of Rs 7017 crores. The two companies Memorandum of Understanding will initially be in effect through October 31, 2022, but it may be extended longer with mutual consent.
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The acquisition will help the Adani Power to expand its offerings and operations in the thermal power sector in the state of Chhattisgarh.
Adani Power to make full payment in cash to DB Power
APL will buy all of DPPL’s (Diliigent Power Private Limited) issued, subscribed, and paid-up equity share capital as well as preference share capital. The complete payment of cost of acquisition of Rs 7,017 Crore is to be made in cash.
According to a filing made on BSE, DB Power has long- and medium-term power purchase agreements for 923.5 MW of its capacity, which are supported by fuel supply arrangements with Coal India Limited. The company has also been operating its facilities profitably.
The regulatory filing mentions, the acquisition does not fall within related party transactions. Also, the promoter/promoter group have no interest in DB Power.
DB Power has a debt of about Rs. 55 Billion
The turnover of DB Power during last 3 financial years is Rs 3,488 crore (for FY 2021-22); Rs 2,930 crore (for FY 2020-21) and Rs 3,126 crore (for FY 2019-20), respectively. Its Profit After Tax for FY21 was Rs 312 crore. DB Power’s debt stands at about Rs. 5,500 crores. The acquisition, which is among the highest in recent history in the sector at this pricing, equates to Rs 6 crore/MW.
Plant availability factor remained above normative levels while plant load factor (PLF) increased to 82% from 78% the previous fiscal, indicating an improvement in the company’s operating performance. This is fueled by additional 200 MW medium-term power purchase agreements (PPAs) with Manikaran Power Ltd. and PTC India Ltd., as well as strong short-term market sales through bilateral agreements and power exchanges.
Additionally, the business has a 360 MW long-term PPA with Chhattisgarh (CG), under which supplies have not yet started. Despite only having PPAs for 76% of its installed capacity, it showed a strong track record of generating. Due to increased demand, the plant load factor (PLF) increased to 82% in fiscal 2022 from 78% in the prior fiscal.
DPPL was incorporated on 13th May 2010 within the jurisdiction of the Office of the Registrar of Companies, Gwalior, Madhya Pradesh.
Copy of BSE filing can be assessed here:
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