Lenders Hire SBI Capital To Find Buyers For Two Power Companies
Lenders invite bids for stake sale in two large power accounts.
SBI Capital Markets Ltd. has been hired to sell an equity stake in two large companies classified as non-performing assets: Jaiprakash Power Ventures Ltd. and Jindal India Thermal Power Ltd.
Through separate notifications on its website, SBI Capital said it has been engaged by the lenders to the two power companies to look for potential buyers, so that they may sell at least 30 percent equity stake in Jaiprakash Power and 51 percent in JITPL.
In case of the Jaypee Group company, lenders have also appointed consultancy firm EY as an adviser. The 24-bank lending consortium to Jaiprakash Power is led by ICICI Bank and holds about 51.8 percent equity in the power company.
The lenders had acquired the stake under the strategic debt restructuring scheme in February, by converting Rs 3,058 crore worth of debt into equity, according to the company’s annual report for 2016-17. As on March 31, Jaiprakash Power had a debt of Rs 12,440 crore.
Jaiprakash Power has an operational portfolio of around 2,200-megawatt power projects. The company also owns stake in a 2,000 MW thermal plant and in an entity which owns and operates a 214-kilometre 400 KV transmission line, according to the information released by SBI Capital and EY.
In case of Odisha-based JITPL, part of the BC Jindal Group, lenders led by State Bank of India are looking to recover loans worth Rs 5,902 crore and have appointed SBI Caps to find a buyer.
SBI has the highest exposure of Rs 1,414 crore, followed by Punjab National Bank (Rs 985 crore), Axis Bank (Rs 585 crore), ICICI Bank (Rs 406 crore) and Bank of Baroda (Rs 337 crore), according to SBI Capital.
The 1,200-MW coal-based thermal power plant built at a total cost of Rs 7,061 crore, or Rs 5.88 crore per megawatt, has been set up in two phases of 600 MW each. Phase I and II of the power project were commissioned in 2014-15. The project has been funded at a debt-to-equity ratio of 75:25.
The company has a linkage from Coal India to supply over 2.687 million metric tonnes per annum fuel on a long-term power purchase agreement for 600 MW, and the remaining coal is being procured through e-auctions and special forward e-auctions from Talcher mines in Odisha.
The company registered a net loss of Rs 310 crore in the nine months to December, as per the bid document.
In 2015-16, the net losses were Rs 262.6 crore and in 2014-15, the company had registered a net loss of Rs 23.8 crore. It had reported a net profit of Rs 5.7 crore in 2013-14.
The call for selling stake in the two companies comes at a time when banks are looking at ways to resolve extreme stress on their books. Apart from ramping up recovery efforts, lenders are also engaging with ailing borrowers to use various stress resolution mechanisms introduced by the Reserve Bank of India. Banks have also initiated the insolvency and bankruptcy process against a number of companies, including 12 large stressed accounts.
As on June 30, banks had gross NPAs worth over Rs 8 lakh crore, with a large part of bad loans with the public sector lenders.