Torrent Power Acquires L&T's Punjab Coal Plant in Rs 6,889 Crore Deal
In a major strategic move, Torrent Power has announced the acquisition of Larsen & Toubro's (L&T) coal-fired power plant in Punjab. The enterprise value of this landmark deal stands at a substantial Rs 6,889 crore, representing Torrent Power's significant entry into the fast-growing power market of northern India.
Financial Structure and Plant Details
The acquisition involves an upfront cash payment of Rs 3,661 crore. Additionally, Torrent Power will assume approximately Rs 3,228 crore of Nabha Power's existing debt. Nabha Power, the subsidiary operating the plant, runs a highly efficient 1,400-megawatt (MW) thermal power facility located in Rajpura, Punjab.
This plant operates under a secure, long-term 25-year Power Purchase Agreement (PPA) with the Punjab State Power Corporation Limited, ensuring a stable revenue stream. For the financial year 2024-25, Nabha Power reported robust financial performance with revenue of Rs 4,422 crore and an operating profit of Rs 1,153 crore.
Strategic Significance and Market Impact
Upon successful completion of the transaction, which is subject to clearance from the Competition Commission of India (CCI) and expected to close by the end of June, Torrent Power's total operational capacity will see a significant boost. It will increase from the current 5 gigawatts (GW) to approximately 6.4 GW.
Torrent Power Chairman Samir Mehta emphasized the strategic importance of this acquisition. He stated that it marks the company's foray into the "high-growth power market of northern India" and is projected to be "value accretive from day one," enhancing both revenue and profitability immediately.
Plant Performance and Industry Context
The Nabha Power plant is recognized as one of India's top-performing thermal facilities. Constructed with advanced Japanese technology, it achieved an impressive Plant Availability Factor (PAF) of 95.4% in FY25, ranking as the second-highest among large thermal power plants in the country.
Strategically situated in a power-deficit region, the plant plays a critical role in meeting rising electricity demand. It also offers potential for additional earnings through ancillary services. This acquisition aligns with a broader industry trend where power producers are expanding coal-based capacity to address India's escalating power consumption needs.
L&T's Divestment Strategy
For Larsen & Toubro, this divestment is a calculated strategic move. L&T's Chairman and Managing Director, S N Subrahmanyan, clarified that the sale is consistent with the company's objective of unlocking value and sharpening its focus on core business segments. This transaction allows L&T to streamline its portfolio and reallocate resources to its primary engineering and construction domains.
The deal underscores the dynamic nature of India's power sector, highlighting strategic consolidation and capacity expansion as key drivers in meeting the nation's growing energy demands.
