RP-Sanjiv Goenka Group flagship company CESC Ltd. is checking out some stressed power projects for a probable acquisition. These projects were offered to CESC by several banks.
These projects fell into the category of stressed assets, either on their own or because they belonged to corporate groups which ran into financial difficulty, it is learnt. They are spread all over the country.
However, after conducting due diligence , it was found that none of them are in a condition to be revived, and are, therefore, not fit for takeover.
“Only one property is still being studied for a probable takeover,” sources said. Banks, particularly public sector banks, have, of late, been saddled with a clutch of mostly independent power projects, which they had funded and which had become non performing assets, industry sources said. Normally, a power plant has an implementation schedule of 36 months. It gets a moratorium of about 18 months after it goes commercial, when only interests on bank loans are paid. Banks classify a loan as a potential non-performing asset once payment defaults exceed 90 days.
A senior bank official said that banks normally offer a project for takeover only after it feels that a project is facing difficulties due to internal reasons .
“There may be many reasons for a project’s delays and cost over-runs which upsets its financial planning… for a power project, it may be land acquisition problems, delays in approvals, lack of fuel linkage, problems with EPC contractor and delays in equity infusion by promoter.” A week ago, another utility, Damodar Valley Corporation, had said that it was offered some four to five IPPs by banks for a possible takeover. DVC Chairman R N Sen had said that the utility was trying to evolve a model for a possible acquisition.