GMR sells two transmission projects to Adani

The Dollar Business Bureau

GMR Infrastructure signed agreements with Adani Transmission to transfer its stake in two transmission projects in Rajasthan.

According to the agreement, GMR will offload its stakes in Maru Transmission Services and Aravali Transmission Services and sell it to the Adani Group Company. GMR Infrastructure subsidiary will transfer 74% stake in Maru Transmission Services and 49% stake in Aravali Transmission Services to Adani Transmission with an option to continue with holding 26% stake in Maru Transmission Services and 51% in Aravali Transmission Services. However, the consummation of transaction is subject to applicable approvals.

GMR Infrastructure in its press release claimed, “The equity consideration ascribed for the transaction involving both the projects is Rs 100 crore. The total value realisable for GMR Energy could be Rs 220 crore considering this equity consideration and the expected upside of upto Rs 120 crore from regulatory proceeds of various appeals of the assets before the Appellate Tribunal for Electricity (APTEL). Post consummation of the above transaction, the consolidated debt of GMR Group would be reduced. The total debt in the projects as on March 31, 2016 is Rs 324 crore.”

Bengaluru-based GMR will retain rights to receive up to Rs.120 crore from various appeals laying before the Appellate Tribunal for Electricity. These disputes are related to transmission fees disputed by state power distribution companies of Rajasthan.

Earlier, GMR Energy had bagged two transmission projects in Rajasthan on Build-Own-Operate-Maintain (BOOM) basis in 2010. Maru Transmission Services operates 270 km of 400 KV / 220 KV transmission lines in Rajasthan and the project had achieved COD (commercial operational date) in 2013. Aravali Transmission Services operates 96 km of 400 KV / 220 KV transmission lines in Rajasthan and the project achieved COD in 2014. Rajasthan (Discoms) are the beneficiaries of the transmission services from the two projects.

GMR Infrastructure said the deal will offer the buyer an option of acquiring the remaining stake in both the projects.

Adani had recently sought environmental approval to establish a 1-million-tonne-per-year copper smelter with an approximate cost of Rs.10,000 crore in Gujarat. The company aims to ensure secure supply of raw material for its solar photovoltaic (PV) equipment manufacturing, a part of Adani’s ambitions of boosting its solar capacity.

Speaking on the stake sale, GBS Raju, Business Chairman (Energy), GMR Group said “GMR Group continues in its path of Asset Light Asset strategy. The deal will release further liquidity and de-leverage the GMR balance sheet. The asset sale done at challenging market environment further signifies GMR’s ability to create value for its stake holders.”

Adani Transmission is the largest private-sector power transmission company, which currently operates about 5,000 kms of transmission lines across the country. The company has four operational transmission systems in the country’s northern and western regions and is constructing additional projects of about 1,900 kms in various states including Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra and Rajasthan.