Adani Transmission Ltd will complete the acquisition of the power generation, transmission and distribution business in Mumbai run by Anil Ambani-led Reliance Energy Ltd for ₹13,801 crore after securing regulatory approvals this week.

The closure of the deal — announced in December 2017 — will help the cash-strapped Reliance Infrastructure Ltd, a unit of Anil Ambani’s ADAG Group, pare its debt estimated at about ₹15,000 crore.

RBI rule

This will be a big boost to many of India’s beleaguered banks who are seeking to clean-up stressed power loans in line with the Reserve Bank of India’s rule to deal with non-performing assets.

In February, the central bank introduced new rules and a 180-day time line for banks to recast loans that missed payment deadlines. Companies that were in default when the norms came into force on March 1 and failed to find a resolution plan, face insolvency proceedings under India’s new Bankruptcy law.

Of the 70 companies that face bankruptcy proceedings with a combined debt of about ₹3.6 lakh crore, 34 are from the power sector accounting for some ₹1.70 lakh crore.

Cementing position

The deal will help Adani Group enter the power distribution business and position itself as a fully-integrated power utility. The group already runs power plants and transmission lines.

Reliance Energy — India’s largest private sector integrated power utility — caters to some three million customers, entailing about 1,892 MW of power distribution along with generation facilities (500 MW thermal coal-based) and over 540 circuit kilometre (ckt km) of transmission network.

With the acquisition, apart from the largest distribution network, the cumulative transmission network of ATL will touch 12,000 ckt km, out of which approximately 9,540 ckt km are under operation (including about 1,000 ckt km under process of acquisition) and around 2,350 ckt km under various stages of construction. The transformation capacity of ATL will also increase to 19,200 MVA from 36 sub-stations (including 8 EHV sub-stations under acquisition) spread across the country.

“We see the distribution sector as the next sun-rise sector as India embarks on its mission to achieve 24x7 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,” Gautam Adani, Chairman, Adani Group, said while announcing the deal.

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