Mahan Energen ceases to be Adani Power’s subsidiary as RIL acquires 26% stake

Adani Power Ltd.'s (APL) subsidiary, Mahan Energen Ltd. (MEL), is no longer wholly owned by APL. In March, Adani Power's subsidiary MEL secured a 20-year power purchase agreement (PPA) for 500 MW with Reliance Industries Ltd (RIL), operating under the captive user policy outlined in the Electricity Rules, 2005.

Amid this development, shares of Adani Power surged 1.7% to ₹737.85 apiece on the BSE today. The scrip opened at ₹734 against the previous closing price of ₹725.35. The market cap stood at ₹2,80,727.30 crore at 12:56 pm today.

The 600 MW unit of MEL's Mahan thermal power plant is designated as the captive unit for this purpose under the agreement. Concurrently, RIL has acquired a 26% stake in a 600 MW unit of MEL's thermal power plant, which is part of MEL's total 2,800 MW capacity, the company says.

Upon fulfilling all prerequisites set forth in the investment agreement dated March 27, 2024, RIL has subscribed to and MEL has issued and allocated 500,000,000 "Class B" equity shares with a face value of ₹10 each. This transaction grants RIL a 26% ownership interest in the captive unit. This allotment allows RIL to source steady power supply from the captive unit between two companies.

Adani Power reported a 48% decrease in consolidated net profit to ₹2,737 crore for the quarter ending on March 31, 2024, down from ₹5,243 crore in the corresponding period last year. Sequentially, the net profit remained steady at ₹2,737 crore compared to the previous quarter ending in December.

During Q4, the company's total income rose to ₹13,881.52 crore from ₹10,795.32 crore a year earlier. For the full fiscal year FY24, the net profit nearly doubled to ₹20,828.79 crore, up from ₹10,726.64 crore in FY23. Revenue from operations also witnessed an increase, rising 30% to ₹13,363.69 crore from ₹10,242.06 crore in the same quarter of the previous fiscal year.

Gautam Adani, Chairman, Adani Group said, “Adani Power is a key component of our long-term strategy, supplying reliable base load power across a vast part of the country, executing benchmark-setting projects, creating assets of national importance, and acting as the balancing supply to enable greater integration of renewables in the grid. We are committed to continuous innovation across businesses and creating sustainable value for all stakeholders.”