Tata Power has received approval from the Mumbai bench of National Company Law Tribunal (NCLT) for a composite scheme of arrangement.
Through its order dated March 31, 2022, NCLT approved the scheme of arrangement between Coastal Power Gujarat Ltd (CGPL) and Tata Power, and their respective shareholders.
In a release, Tata Power said that the scheme provides for amalgamation of CGPL with Tata Power.
Coastal Power Gujarat Ltd, a wholly-owned subsidiary of Tata Power, operates the 4,000-mw ultra mega power project (UMPP) at Mundra in Gujarat. The Mundra UMPP is considered among India’s most energy-efficient thermal power plants and uses supercritical technology to generate electricity.
Tata Power said that the scheme will result in numerous benefits, such as:
- streamlining the corporate structure and consolidation of assets and liabilities of CGPL within Tata Power
- a more efficient utilization of capital for the enhanced development and growth of the consolidated business in one entity.
- availing easier financial support, bringing operational efficiencies, and enabling cost savings through legal entity rationalization and consolidation
Background
Owing to tariff-related issues, CGPL has been incurring heavy losses, and in August 2020, Tata Power had planned to merge CGPL with itself. At that time, Praveer Sinha, CEO & MD, Tata Power, had said, “CGPL has already suffered large losses and is facing difficulty in financing its operations. Given the inordinate delay in resolution of the tariff matter, the merger will provide relief through direct support from the parent company. The Company continues to be in discussion with various state governments and state discoms. We do hope that the State Governments will take a practical view and resolve the PPA amendment issue in the interest of all stakeholders.”
