Vedanta Eyes Jaypee's Power Business: A Strategic Move in India's Energy Sector
Mumbai: The power business of Jaiprakash Associates (Jaypee) is the most attractive for Vedanta, while some other assets of the debt-laden infrastructure company can be used within the ecosystem of the natural resources major, a top Vedanta official said.
The component which is most attractive to us is their power business, because it suits our overall strategy of going to at least 3,000 MW of power production in India, and it fits into that because we have Athena, Serentica, and our own power plants in our aluminium and zinc units, said Arun Misra, executive director, Vedanta.
Vedanta is the highest bidder for Jaypee, offering ₹12,505 crore in terms of net present value. This includes an upfront payment of ₹4,000 crore. The overall offer of Vedanta is reportedly at ₹17,000 crore. Earlier this month, the Competition Commission of India approved Vedanta's bid to acquire Jaiprakash Associates.
How assets like cement and real estate can be used in the overall economic activities of Vedanta, that's for further investigation. But what is the most important for our strategy in the power component, Misra told ET in an exclusive interaction.
Vedanta, which is the largest producer of aluminium and zinc in the country, also has a power business. At ₹2,195 crore, this business accounted for a little over 5% of the company's consolidated revenue. The business' earnings before interest, tax, depreciation and amortization (Ebitda) stood at ₹228 crore in the September quarter, which is about 2% of Vedanta's consolidated Ebitda during the quarter.
In September, Kotak Alternate Assets emerged as the highest bidder for Jaiprakash Power Ventures compulsorily convertible preference shares and its debt, with a cumulative offer of ₹7,400 crore. This could potentially complicate Vedanta's bid for the power business. Jaiprakash Associates holds 24% stake in Jaiprakash Power.
The Gaur family-promoters of Jaiprakash Associates-have also re-entered the race to acquire control of the company. While the Gaur family's offer is higher at ₹18,000 crore, Vedanta is positive that it will acquire Jaiprakash Associates.
