JSW Energy has formally terminated the acquisition of GMR's Odisha Kamalanga Power plant due to COVID-19 related uncertainty. The transaction to acquire entire stake for Rs 5,321 crore was on hold for the last two months.
JSW Energy in May said it had entered into share purchase agreement with GMR Energy to acquire its subsidiary, GMR Kamalanga Energy (GKEL), which owns and operates a 1050 MW (3 x 350 MW) coal-based thermal power plant at Dhenkanal, District Kamalanga, Odisha.
Sources close to the development said that the board has taken the decision to terminate the deal because of the continuing unpredictability. JSW Group is already in a mission to control costs and conserve cash to make the companies resilient to handle eventualities.
JSW Energy has 90-days time for execution of share purchase agreement and it will get lapsed in August last week. The acquisition was part of the company's strategy for expansion and consolidation in the power sector.
Post-acquisition, the total installed power generation capacity of JSW Group firm was supposed to increase to 5,609 MW. This was essentially for expanding the company's presence in the eastern region of the country and further diversifying its fuel mix and off-take arrangements. The two sides were in negotiations since October 2019.
Global forecasting firm Oxford Economics recently said it expects India's GDP growth to lose momentum from late third quarter (October-December) of the current fiscal when the push from reopening of economy fades. It further said India fares the worst in its Asia recovery scorecard, implying that the country will likely take the longest among major economies to converge to its pre-coronavirus growth level.