Lenders of the bankrupt KSK Mahanadi Power Company, which operates a 3,600 MW coal-based power plant in Chhattisgarh, are planning another auction round in early September. This decision follows the Adani Group emerging as the highest bidder with an offer of Rs 270 billion. Competing bidders will be allowed to surpass Adani’s offer in this new auction.
KSK Mahanadi currently has three operational units of 600 MW each, with additional units under construction. In the previous bidding round, Adani outbid other contenders such as Capri Global, NTPC, Coal India, JSW Energy, Jindal Steel and Power, and Vedanta. One bidder mentioned the possibility of using the “Swiss challenge” method to improve the offer for the project, which already has Rs 90 billion in cash reserves. The operational status and cash-generating ability of the plant make it an attractive acquisition target.
Lenders have made claims totalling Rs 293.3 billion against KSK Mahanadi, which entered debt resolution in 2020 after defaulting on its payments. Several banks, including the State Bank of India (SBI), have sold their loans to asset reconstruction companies (ARCs) to recover part of their dues. KSK Mahanadi had power purchase agreements with Andhra Pradesh, Tamil Nadu, and Uttar Pradesh but defaulted due to coal supply shortages. Although the company was allocated coal blocks in Chhattisgarh, these were cancelled following a Supreme Court ruling in 2014. The plant later received coal through the Ministry of Power’s “Shakti” scheme but still faced shortfalls, leading to coal imports.
SBI initially tried to resolve the issue under its SAMADHAN scheme for stressed assets, aiming for resolution outside the National Company Law Tribunal (NCLT). However, the lack of cooperation from other lenders and buyers led to the project’s move to the bankruptcy court.