Adani Power’s Strategic Acquisition of Lanco Amarkantak Power: NCLAT Issues Notice Amid Creditor Challenge

In a recent legal development, the National Company Law Appellate Tribunal (NCLAT) issued a notice to Adani Power in response to an appeal contesting its acquisition of the distressed Lanco Amarkantak Power Limited (LAPL). Filed by Indian Bank’s stressed asset management division, the appeal questions the resolution process that allowed Adani Power’s acquisition to proceed, citing the rejection of its ₹17 crore claim. This challenge highlights ongoing tensions within the insolvency resolution landscape, as stakeholders seek clarity on the enforcement of creditor claims and the broader implications for corporate acquisitions in India’s energy sector.

Adani Power’s acquisition of LAPL, which was initially approved by the National Company Law Tribunal (NCLT) in Hyderabad, represents a significant milestone in the company’s journey to enhance its position as India’s top private-sector power producer. With Adani Power’s expanded operational capacity set to increase from 15,250 MW to 15,850 MW, this acquisition not only bolsters its power generation footprint but also signals the group’s intent to strengthen its infrastructure capabilities in response to rising energy demands across India.

A Closer Look at the NCLAT Notice and the Creditor’s Appeal

On Monday, the NCLAT’s Chennai bench issued a notice to Adani Power following an appeal from Indian Bank’s stressed asset management wing. The bank’s claim, which amounts to ₹17 crore, was initially issued as a bank guarantee to Lanco Infratech Limited, LAPL’s parent company. The resolution professional (RP) responsible for LAPL’s insolvency case allegedly rejected this claim, prompting the bank to contest the resolution plan’s validity.

While the NCLAT has issued the notice, it opted not to impose an interim stay on Adani Power’s acquisition, allowing the process to continue without immediate disruption. The tribunal instead requested responses from the involved parties, opening the door for further examination of the dispute while ensuring that the acquisition process remains on course for the time being.

The Initial Approval of Adani Power’s Plan by NCLT Hyderabad

Adani Power’s ₹4,101 crore acquisition plan for LAPL was originally approved by the NCLT in August, following strong support from 95.40% of the Committee of Creditors (CoC). Under this plan, Adani Power gained control of LAPL’s thermal power assets, located in Korba, Chhattisgarh, which include a 600 MW plant and long-term power purchase agreements with the states of Haryana and Madhya Pradesh. The acquisition is expected to be a pivotal asset within Adani Power’s portfolio, enhancing the company’s reach within India’s evolving energy market.

The acquisition of LAPL comes at a time when the company is facing outstanding liabilities of approximately ₹15,633 crore. Adani Power’s entry not only provides much-needed financial restructuring but also aligns with its strategy to expand its production capacity, leveraging its expertise in managing large-scale power infrastructure projects like the Mundra Thermal Power Plant and Kamuthi Solar Project.

Navigating the IBC Framework and Timelines

Adani Power’s acquisition of LAPL falls under the provisions of the Insolvency and Bankruptcy Code (IBC), which requires the completion of such acquisitions within 60 days of NCLT approval. For Adani, this deadline was set for 20 October 2024, with the acquisition officially completed on 6 September, as disclosed in regulatory filings. The IBC’s time-bound approach aims to facilitate the swift resolution of insolvency cases, minimizing disruptions to businesses and supporting creditor interests.

However, this timeline-driven framework has also introduced complexities, especially when unresolved creditor claims surface, as seen in the present case. Indian Bank’s appeal underscores the potential challenges that arise when stakeholders dispute the resolution professional’s handling of claims, raising questions about how claims should be adjudicated in multi-stakeholder insolvency cases.

The Complex Bidding Landscape Leading to Adani’s Acquisition

Adani Power’s acquisition journey has been marked by intense competition from industry peers and investment funds, adding a layer of complexity to the transaction. The acquisition was initially delayed by competitive bids from various parties, including Aditya Birla ARC, Vedanta, Edelweiss ARC, and Jindal Power. In 2020, both Vedanta and iLabs India Special Situations Fund submitted formal resolution plans, but these were ultimately rejected by the CoC due to perceived shortcomings in commercial viability.

In response, Adani Power re-entered the auction process, this time with an unsolicited offer that elevated its bid to ₹4,101 crore. This revised bid secured the necessary support from the CoC, facilitating the acquisition’s final approval. While the process experienced delays, Adani Power’s persistence and strategic approach ultimately allowed it to emerge as the successful acquirer.

Additional Interest from Reliance and PFC Consortium

Adani Power’s competitive edge was further demonstrated in a 2022 bidding round, which saw renewed interest from several prominent companies, including Reliance Industries and a consortium comprising PFC Projects and REC Ltd. Adani Power and Reliance later withdrew from this auction round, leaving the PFC Consortium as the only remaining bidder with a ₹3,020 crore offer. Ultimately, Adani Power’s subsequent bid proved successful, demonstrating its ability to navigate complex bidding environments and emerge with favorable outcomes.

Adani’s Future with LAPL and Strategic Implications

With the acquisition of LAPL now secured, Adani Power is well-positioned to harness its new asset’s potential. The 600 MW thermal power plant at Korba, Chhattisgarh, is a valuable addition to Adani’s portfolio, with the potential to provide consistent energy supply to high-demand regions. The plant’s long-term power purchase agreements with Haryana and Madhya Pradesh offer a stable revenue stream, reinforcing Adani Power’s commitment to meeting India’s energy requirements.

In a broader sense, the acquisition aligns with Adani Power’s strategy of bolstering its capacity and diversifying its portfolio to include assets that support India’s energy transition. The company’s extensive experience in constructing and operating large-scale power plants enhances its capability to manage LAPL’s assets effectively and drive operational improvements.

Conclusion: What Lies Ahead for Adani Power and LAPL

Adani Power’s acquisition of LAPL marks a key milestone in the company’s ongoing expansion and underscores its intent to cement its position as a leading player in the Indian power sector. By overcoming competitive bids, regulatory hurdles, and creditor disputes, Adani Power has demonstrated a robust approach to strategic acquisitions that positions it for sustained growth in the years to come.

While the recent notice from the NCLAT introduces an element of uncertainty, the absence of an interim stay suggests that the acquisition will likely proceed without immediate disruption. For Indian Bank and other stakeholders, the appellate proceedings offer a forum to address concerns around claim adjudication within the IBC framework.

Looking ahead, Adani Power’s expanded operational capacity and strategic positioning in India’s energy market underscore its readiness to meet growing demand and capitalize on the country’s push toward self-sufficiency in energy production. The acquisition of LAPL not only enhances Adani’s portfolio but also reinforces its role in supporting India’s economic growth and energy security.

Adani Power’s journey with LAPL serves as a case study in resilience, adaptability, and the pursuit of strategic growth amid regulatory complexities. As the company moves forward, its approach to integrating LAPL’s assets and addressing creditor concerns will be watched closely by industry observers, setting a precedent for future acquisitions within India’s dynamic energy sector.