JSW Energy: Monnet deal raises concerns

JSW Energy’s appetite for acquisition-led growth seems enormous. On Thursday, JSW signed a memorandum of understanding (MoU) to buy the under-construction power plant of Monnet Group, the final decision of which will be taken after due-diligence. The inorganic growth strategy is positive, looking at the time and effort required for setting of new capacities, and ensuring fuel linkages and tie-ups for sale of output.

JSW’s move to acquire Monnet Ispat’s 1,050 Mw of thermal capacity is a step in the right direction, assuming it does not pay a significant premium over the project’s cost. While the sale agreement for part of the output is in place, Monnet had recently won a coal block for ensuring supplies. The project, estimated to cost Rs 7,100 crore, is likely to be commissioned in the next 18 months. – Business Standard