DB Power: All about the company that Adani Power failed to acquire

Gautam Adani-controlled Adani Power signed a deal on August 18, 2022, to take over the thermal power assets of DB Power Limited (DBPL) from the Dainik Bhaskar Group for around Rs 7,017 crore enterprise valuation. It was announced that Adani Power will be completing the deal by October 31, 2022. 

But the deadline was later extended multiple times, with the last extension of the deadline to February 15, 2023.  

Incorporated in October 2006, DB Power is engaged in the business of establishing, operating, and maintaining a thermal power generating station. It's a public unlisted company and is classified as 'company limited by shares'. Diligent Power (DPPL) is the holding company of DB Power.  

DB Power owns and operates two units of 600 MW each of thermal power in the Janjgir-Champa district, Chattisgarh. It recorded a turnover of Rs 3,488 crore for the financial year 2022, Rs 2,930 crore for FY21, and Rs 3,126 crore for FY20, respectively. 

Dainik Bhaskar’s power business comes under a separate holding company -- Diliigent Power Private Limited (DPPL) which owns 83.87 per cent of the company. PE fund Global Infrastructure Partners (GIP) holds the rest, 16.13 per cent. 

DB Power has claimed that it has been operating its facilities profitably, and has successful long- and medium-term power purchase agreements for 923.5 MW. It was backed by fuel supply agreements with Coal India. 

The acquisition plan 

In August 2022, Adani Power planned to hold 100 per cent of the total issued, subscribed, and paid-up equity share capital and preference share capital of Diligent Power. DPPL was supposed to hold 100 per cent of DB Power on the closing date of the transaction. 

The acquisition was expected to expand Adani Power’s offerings and operations in the thermal power sector in the state. The deal was Adani’s second-biggest acquisition in the energy sector, after its acquisition of SB Energy India. 

Multiple extensions of deadline 

Initially, when the deal was signed in August 2022, the initial term of the Memorandum of Understanding was till October 31, 2022.  

After the first deadline expired, both companies agreed to seal the deal on November 30.  

Later, the November 30 deadline was pushed to December 31, and subsequently to January 15 and then February 15. 

In its latest communication to the exchanges, which was on February 15, Adani Power did not provide any information on further extension, indicating a likely withdrawal of the acquisition plan. 

“We wish to inform that the long stop date under the memorandum of understanding (MoU) dated August 18, 2022, has expired,” Adani Power said in a stock exchange notice on Wednesday but did not provide details as to whether the date will be extended or the agreement will be renegotiated. 

The deal was called off within weeks after US-based short seller Hindenburg Research accused the Gautam Adani-led Adani Group of “brazen stock manipulation” and “accounting fraud”. 

The New York-based short seller in its report claimed that key listed Adani companies took on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing. 

In reply to these allegations, the Adani Group said that the report was a “calculated attack on India”. The conglomerate has cumulatively lost over Rs 10 lakh crore since January 24. 

Adani Power has an installed power generation capacity of 12,450 MW with a presence across Gujarat, Maharashtra, Chhattisgarh, Rajasthan, and Karnataka. 

In Q3 results, the company reported dismal earnings, where its net profit declined 96 per cent to Rs 8.77 crore. In the year-ago period, the profit was Rs 218.49 crore. 

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