JSW Energy Acquires 3,600 MW KSK Mahanadi Power Company for INR 16,084 Cr

JSW Energy Ltd. has completed the acquisition of KSK Mahanadi Power Company Ltd. (KMPCL) pursuant to the Resolution Plan submitted by the company under the corporate insolvency resolution process of the Insolvency and Bankruptcy Code, 2016.

The Resolution Plan has now been implemented, and consequently, KMPCL has become a subsidiary of the company. As per the terms of the resolution plan, the company will hold 74 percent of the equity shares of KMPCL and the secured financial creditors collectively hold the balance 26 percent of equity shares. The transaction is for a total Resolution Amount of INR 16,084.08 crore.

Commenting on the development, Sharad Mahendra, Joint Managing Director and CEO of JSW Energy, “We are pleased to announce the successful acquisition of KSK Mahanadi Power Company and thereby surpassing the significant milestone of 10 GW operational capacity. This is a very timely and strategic acquisition enhancing our baseload thermal power portfolio, ahead of the upcoming peak demand season.”

He further added, “KSK is a highly efficient plant, located near coal blocks and boasts fuel supply agreements and PPA tie-ups. We are confident that this asset will create significant value for the stakeholders and strengthen our position as a leading energy provider in India. This milestone is a testament to our strategic vision and execution capabilities. As we move forward, we are confident of achieving 20 GW operational capacity significantly before 2030.”

The asset consists of 3,600 MW thermal power plant, utilising domestic coal and located in the state of Chhattisgarh. Presently, 1,800 MW (600 MW x 3 units) is operational with a remaining plant life of ~15 years and is 95 percent tied-up under long and medium-term power purchase agreements. An additional 1,800 MW (600 MW x 3 units) is under-construction out of which one unit (600 MW) is 40 percent completed and the balance of plant is in place for the entire 3,600 MW. The plant has a fuel security for the operational capacity in terms of a long-term fuel supply agreements with coal available from nearby coal mines present in Chhattisgarh and Odisha. Furthermore, the plant has a firm arrangement for water, rail and transmission infrastructure for the entire 3,600 MW capacity.

The transaction values the asset for the resolution amount of INR 16,084 crore for KMPCL. This is the largest acquisition of a thermal power asset under the IBC process in India. With this transaction, the company adds 1,800 MW of operational capacity, and the brownfield expansion of the balance 1,800 MW would be taken up in phases.

Pritesh Vinay, Director (Finance) and CFO of JSW Energy stated, “The completion of the KSK Mahanadi Power Company transaction demonstrates our ability to successfully close complex transactions and consistently create value for all stakeholders. The transaction has been financed through a combination of internal accruals and debt. This strategic asset has a strong cash flow generation potential and expected returns on operating capacity comfortably surpasses our internal hurdle rate of mid-teen Equity IRR.”

He further added, “More attractively, it gives an optionality to expand by another 1,800 MW at a very low cost given that a lot of investments have already been made. As a next step, we will implement a comprehensive plan to maximise generation and potential cost take outs to enhance EBITDA from this asset within the next 12-18 months. Our strong track record of investing in assets with high underlying cash returns provides a key tailwind to our growth ambitions.”

With the completion of this transaction and the organic capacity additions of wind so far in the quarter, the company has achieved 10,200 MW operational capacity surpassing the 10 GW milestone before FY2025. The Company now operates 5,308 MW of thermal power plants while 350 MW capacity at JSW Energy (Utkal) in Odisha has been synchronised and is awaiting commissioning.

The company aims to reach 20 GW generation capacity and 40 GWh of energy storage capacity significantly before 2030. JSW Energy has set an ambitious target of achieving Carbon Neutrality by 2050.