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JSW Energy no longer interested in Monnet Power, looking for new growth avenues: COO

JSW Energy no longer interested in Monnet Power, looking for new growth avenues: COO

JSW Energy no longer interested in Monnet Power, looking for new growth avenues: COO
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By Kevin Lee  Oct 12, 2018 6:28:19 AM IST (Updated)

Billionaire Sajjan Jindal’s JSW Energy is no more interested in acquiring bankrupt Monnet Power, a senior company executive told CNBC-TV18 on Thursday.

Billionaire Sajjan Jindal’s JSW Energy is no longer interested in acquiring bankrupt Monnet Power, a senior company executive told CNBC-TV18 on Thursday.

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Monnet Power, which owns and operates coal fired thermal power plant in Odisha, is an unlisted company owned by the Jajodia family. The firm ran into trouble when the Supreme Court cancelled multiple coal mine licences in 2014.
JSW Energy chief operating officer Sharad Mahendra said while the company was not moving forward with its planned acquisition of Monnet Power, it remains committed to taking over Prayagraj Power, a thermal unit located in Uttar Pradesh near Allahabad.
Media reports suggested JSW Energy has promised lenders to sweeten the offer for Pragyaraj Power in an attempt to trump Tatas backed Resurgent Power.
The power sector is buzzing with potential acquisition opportunity. Over the past few months, banks have referred 18 power sector accounts to the bankruptcy court following the RBI's February 12 circular.
The circular required banks to finalise a resolution plan in case of a default on large accounts of Rs 2,000 crore and above within 180 days, failing which insolvency proceedings will have to be invoked against the defaulter.
JSW Energy is waiting for lenders to send power assets to the National Company Law Tribunal for insolvency proceedings before jumping into the fray in a big way.
The company’s next big avenue of organic growth is likely to come from the launch of its electric vehicle, which it has tentatively pushed to 2021 from the original 2020 deadline.
Mahendra did not comment on reports that the company was looking to buy General Motors’s manufacturing plant in Pune, but reaffirmed that the first offering would be in the passenger vehicles space.
A more detailed plan on the company’s EV foray is likely to be revealed to the public over the next 2-3 quarters, according to Mahendra.
In the hydroelectric space, the company is looking to commission another 240 megawatt (MW) plant in Himachal Pradesh over the next 4 years. JSW Energy already has a capacity of 1300 MW of hydro power in the state between its Karcham Wangtoo and Baspa plants. It is also hoping that the central governments hydro policy, long-awaited by industry players, will give incentives on tax and the way depreciation of hydro plants is currently accounted for.
On the solar power side, which has been a relative outperformer in India’s power space, Mahendra is of the view that tariffs being discovered at solar power auctions are too aggressive, and unsustainable for long-term players in the space.
JSW has focused its solar power efforts on the B2B (business to business) space and is likely to stay on that course, with Mahendra saying that 8-10 percent returns are not attractive enough for JSW Energy.
Solar and wind-based power are emerging as the outperformer in the debt-laden power space, but experts and industry players alike are worried about what they see as over-aggressive, unsustainably low tariffs being discovered in auctions.
For JSW Energy, the challenge is to find a balance – move too slowly and it runs the risk of missing out on great assets at throwaway prices, but move too fast and it might end up finding itself in the same position as so many Indian power companies are in right now.
 
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