NEW DELHI (TIP): Adani Power will buy Lanco Infratech’s 1,200-MW imported coal-fired power plant at Udupi in Karnataka in a deal valued at more than Rs 6,000 crore, marking the biggest acquisition in India‘s thermal power industry. The acquisition, in a way, comes as redemption for the Adani group, which lost out to Anil Ambani’s Reliance Power for picking up hydel assets of the Jaypee Group.

R-Power outbid the Adani group by offering Rs 12,000 crore for Jaypee’s hydel capacity aggregating 1,800 MW. For Lanco’s Udupi plant, Adani would pay Rs 2,000 crore in cash and take over the plant’s long-term debt of Rs 4,000 crore. The deal would bring down Lanco’s debt by Rs 4,000 crore. Lanco has a total debt of Rs 36,000 crore ($6 billion) and is reported to be examining options, including selling Griffin Coal in Australia it had bought for Australian $750 million ($665 million) in 2011, to retire outstandings.

Lanco is seeking to sell Griffin Coal after reaching an agreement with banks to restructure debt. Coal acquisitions in Australia by foreign companies have soured as prices for the fuel fell for three straight years. The Udupi plant is the first imported coal-based unit set up by a private power producer in the country, Lanco said in a release. It comes with a captive jetty to handle import of four million tonnes of coal per year and an external coal handling system in the new Mangalore Port Trust. This capacity too can be doubled. The infrastructure would add to Adani’s coal import capacity.

The company runs India’s largest coal handling port at its Mundra special economic zone in Gujarat. The Udupi power plant has an added advantage since its capacity can be raised by another 120 MW and the special purpose vehicle that operates the plant has an agreement with the Karnataka government. The plant supplies 90% of the power to the state and the rest goes to Punjab. Adani Power has an installed generation capacity of about 8,620 MW and is looking at the acquisition as one of the options to ramp up capacity to 20,000 MW by 2020.

The company is in talks with several other players such as GMR, Indiabulls, Avantha Power and Athena, who want to sell their projects, with aggregate capacity estimated at 50,000 MW, in the face of coal and gas shortage and other problems. It has a presence in almost the entire value chain of the power industry and uses this strength to turn around stranded projects.