JSW Energy’s plans to acquire power plants a positive, but will test its limits
In a country that barely adds thermal power capacity, one way to power ahead is through acquisitions.
From this perspective, JSW Energy Ltd’s proposal to take over two troubled thermal power plants is being seen as a positive. Power offtake agreements and fuel linkages—crucial cogs for power plants—are in place for both.
Low financial leverage means the company is well placed to fund the acquisition. However, two acquisitions in quick succession have raised some concerns on the debt front. CARE Ratings Ltd placed the ratings of JSW Energy on “credit watch with negative implications” citing the possibility of a significant rise in leverage from FY19’s 0.78 times.
