JSW Energy to buy Jaypee's Bina Power Plant

JSW is in talks with Jaypee Group company Jaiprakash Power Ventures to acquire 500 megawatt (MW) Bina thermal power project in Madhya Pradesh. The company wants to almost double its power capacity to 6000 MW from 3140 MW. The estimated cost to acquire power plant will be Rs 3100 to 3500 crore. This would be the third acquisition by Jindal group in last one year. The deal would make JSW Energy the largest hydropower producer in the country.

Recently, JSW Energy signed a definitive agreement with Jaypee to acquire the 300 MW Baspa-II and 1091 MW Karcham Wangtoo projects in Himachal Pradesh for Rs 9700 crore. The company also signed a non-binding agreement to purchase a majority stake in the power arm of Monnet Ispat & Energy with a combined capacity of 1050 MW.

According to the company, Bina plant can be scaled up to produce 1500MW. JSW would be able to crack the deal at amount of Rs 3100 crore to Rs 3500 crore. The company is likely to get the Bina plant at a good valuation as Rs.5 crore to 6 crore per MW.

Jaypee is selling its hydropower projects to cut down the huge debt burden of Rs 60000 crore. JSW Energy will fund the hydropower projects transaction with Rs 2000 crore in cash & internal accruals and take on Rs 6500 crore of the projects’ debt on its books. JSW Energy had a net debt of Rs 7085 crore as of June 2015.

JSW Energy's consolidated debt stood at Rs 8211 crore as of FY15. The company already has sought shareholders approval to raise Rs 12500 crore during current fiscal year, of which Rs 5000 crore is for ongoing capital expenditure and Rs 7500 crore for organic and inorganic growth.

The share price of JSW Energy increased on BSE by 7.75 per cent in early trades and trading at Rs 71.8 on intraday basis. The shareholding pattern indicates that FII holdings expanded by 123 basis points to 8.47 per cent and DII holdings contracted by 48 basis points to 5.76 per cent during June 2015 quarter.

JSW Energy is engaged in generation and sale of power. The Company's operating segments include Power Generation, Power Transmission, Mining, Power Trading and Equipment Manufacturing. It produces approximately 3140 megawatt (MW) of power. JSW's power plants are located at Vijayanagar, Karnataka; Ratnagiri, Maharashtra and Barmer, Rajasthan. The Vijayanagar plant produces 860 MW of power.