Billionaire Sajjan Jindal-led JSW Steel is keen on revising its bid for his brother-in-law Sandeep Jajodia-led Monnet Ispat and Energy, after the lead banker SBI opposed Mr. Jindal’s bid to buy the firm.
However, Mr. Jindal is not very interested in acquiring JSPL power unit, led by his brother Naveen Jindal for which he signed a deal last year, as the power sector is still struggling.
Sajjan Jindal chairman of JSW Steel said: “Now there is a completely new process that RBI is initiating that all these stressed assets will have to go through NCLT process and whatever that process will entail, we will follow that.”
“Probably, it will be looked into afresh,” Mr. Jindal told The Hindu.“There would be consolidation in the industry and the good companies will look into stressed assets.” “At the moment power purchase agreements (PPAs) are not being signed as the state electricity boards and other users are not signing long term PPAs. Right now, there is lots of stress on the power sector and the new PPAs are difficult to come by.”
Mr. Jindal expects the bankers to take haircuts to make power assets lucrative for the buyers like him. “Without haircut, there is no viability. These plants have become highly overpriced. Markets have changed as the viability of coal based power plant was ₹4.5 crore per MW till yesterday and today it’s probably ₹2 crore per MW. Of course, the Equity goes out first but then the banks need to take the haircut.”
On JSPL unit, he said: “They have time till June 2018 to get all the approvals but right now they are going slow. Without PPAs, we can’t take that.”
Mr. Jindal is also not enthused with Tata Power’s offer to sell 51% Equity in 4,000 MW Mundra UMPP equity for ₹1. “Even if they give debt at ₹1, it will be difficult to run the plant beacuse of coal. They signed at such a low price when the power sector itself is completely collapsed.”
Source: The Hindu