IDBI Bank-led consortium puts Sai Wardha Power Plant up for sale

A consortium of lenders led by IDBI Bank has put on sale a 540-megawatt (MW) coal-based power plant in Maharashtra owned and operated by Sai Wardha Power Generation, according to a bid document. The plant’s total debt outstanding, as on March 31, stood at Rs 3,349 crore, of which IDBI’s exposure was 41%, or Rs 1,367 crore.

SBI Capital Markets (SBI Caps) has been appointed by IDBI on behalf of the lenders’ consortium to invite proposals through a bidding process and identify an investor for acquisition of at least 51% share in the company. The power asset is promoted by the KSK Group, another of whose plants, KSK Mahanadi Power, was put on the block by Power Finance Corporation (PFC).

The other lenders to Sai Wardha are Standard Chartered Bank, which is owed 21% of the outstanding, Assets Care & Reconstruction Enterprise (2%), Oriental Bank of Commerce (6.7%), Uco Bank (3%), Axis Bank (6%), IDFC Bank (4.7%), Bank of India (2%), State Bank of India (5%), Indian Overseas Bank (6%) and India Opportunities Fund (2.7%).

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The project started commercial operations in July 2011 and the plant has been operational for about seven years.

According to the bid document, the plant had in place a mix of captive customer power purchase agreements (PPAs) as well as medium-term PPAs with Reliance Infrastructure (RInfra) in the initial years of operation. However, it was later unable to roll over its contract with RInfra.

The document also states that in a recent tender for medium-term PPAs, Sai Wardha emerged L1 for allocation of capacity of 100 MW for which the letter of award is yet to be issued for supply from April 1, 2019.

In recent months, banks and other lenders to power projects have put up a number of stressed assets for sale, including Lanco Kondapalli Power, SKS Power Generation (Chhattisgarh) and Jhabua Power. Many of these assets had earlier undergone strategic debt restructuring (SDR) as per the Reserve Bank of India’s (RBI) norms, resulting in the conversion of lenders’ debt to equity. With the implementation of the RBI’s February 12 circular, all existing restructuring norms have lapsed and banks have been forced to resolve assets to which they had been applied.