Says deal will help it become debt-free’ have a surplus of Rs 3,000 crore; marks Adani entry into the power distribution
Reliance Infrastructure (R-Infra) has signed a definitive agreement with Adani Transmission to sell its integrated Mumbai power business — generation, transmission and distribution — in a deal worth Rs 13,251 crore. The agreement values the business at Rs 12,101 crore. In addition, there are approved regulatory assets — payments due to the company from utilities — of Rs 1,150 crore, which will also flow to R-Infra, including which the deal value is Rs 13,251 crore. There are additional regulatory assets “under approval” worth Rs 5,000 crore and net working capital estimated at Rs 550 crore, which will also flow to R-Infra, taking the total consideration to Rs 18,800 crore, R-Infra said in a statement. The transaction following regulatory approvals will help R-Infra become debt-free and have a surplus of Rs 3,000 crore, it said. The deal will also mark the entry of Adani Transmission into the distribution business. Adani Group chairman Gautam Adani said, “We see the distribution sector as the next sunrise sector, as India embarks on its mission to achieve 24×7 power for all. We see a massive growth opportunity and will look at both organic and inorganic opportunities to build a market leading distribution company. With this acquisition, Adani Transmission will enjoy benefit of scale and of being an integrated distribution and transmission business in India.”
R-Infra is equally upbeat about the deal, calling it a “transformative monetisation exercise”and a major step in the company’s effort to deleverage itself and focus on asset-light EPC and defence businesses. R-Infra CEO Lalit Jalan told FE that he expects the regulatory approvals to come by the end of March 2018, following which working capital worth Rs 550 crore will come to the company. “The regulatory assets worth Rs 5,000 crore will be approved by MERC (Maharashtra Electricity Regulatory Commission) and Aptel (Appellate Tribunal on Electricity) by next year and, depending on the regulator, the assets will come to us in within the next one to three years. Besides, there will be a carrying cost for any delay,” Jalan said.
The company plans to use the surplus Rs 3,000 crore to fund growth in other business verticals such as metro, roads (coastal roads, Mumbai-Nagpur Highway) and Delhi distribution business, indicated Jalan.
R-Infra supplies electricity to around 3 million consumers in and around Mumbai suburbs, spread over 400 square kilometres. It meets the total energy input requirement of about 10,800 million units and maximum system demand of about 1,892 MW. The transmission business has been operating eight 220 kV extra high voltage (EHV) substations having a total 3,000 MVA of transformation capacity with around 540 circuit km of overhead and underground lines, including lines for evacuation of power from 500 MW Dahanu Thermal Power Station, that supplies power to the discom.