KSK Mahanadi lenders to seek nod to claim excess cash

Mumbai: Creditors to the insolvent KSK Mahanadi Power are seeking the National Company Law Tribunal's (NCLT) approval to distribute the ₹4,300 crore excess cash in the company, as they race to beat the fiscal year-end deadline for logging some recoveries from this exposure. The ₹4,300 crore of surplus cash is currently on the books of the power producer.

JSW Energy's ₹16,000-crore offer for the 1800 MW plant was approved by the NCLT last month, but the winning bidder has 90 days to complete the payment, meaning creditors do not expect the cash until May. Creditors will hence approach the NCLT to distribute the cash already present in the company before the resolution process is completed. To be sure, an interim distribution has already happened after the Hyderabad bench of the NCLT in August 2024 had given its go-ahead to distribute the surplus funds in the company. About ₹6,223 crore had been distributed to creditors post that order last year.

"It is estimated that about ₹4,300 crore is still lying in the company which can be used to settle lenders' dues. The NCLT has previously given a go-ahead and all the process is in place. We just want to take an okay from the court. Once that comes we expect some interim distribution to take place this month before the end of the fiscal," said a person aware of the developments. Resolution professional Sumit Binani, did not reply to an email seeking comment.

In October 2024, JSW Energy emerged as the highest bidder for KSK Mahanadi Power, offering ₹15,985 crore to financial creditors beating the likes of Adani Power, Jindal Power, government-owned NTPC, Vedanta Group and Capri Global in a close contest.

JSW's offer means a total recovery for creditors of more than ₹26,500 crore as the company's resolution plan left the ₹10,500 crore cash and receivables from the company for lenders and also offered future upside with a 26% equity stake in the company. The extra cash in the company along with the equity upside means lenders can hope to get all of their ₹29,325 crore admitted claims from the company, a happy ending after more than five years of delay.

KSK Mahanadi was admitted to the insolvency process in October 2019 following a petition by Power Finance Corp (PFC). The company has 1800 MW of thermal power capacity of three units of 600 MW each, operating in Chhattisgarh, utilising domestically sourced coal which are supplied through a railway line connecting to the plant. The rest of the three units of 600 MW each are in various stages of developments with power purchase agreements in place.

Creditors to the company include banks, NBFCs and bad debt aggregators who have bought the debt from banks over the years as lenders have been frustrated by the delays in recovery proceedings from this account. PFC and its subsidiary Rural Electrification Corp (REC) together control 27% of the debt and are the largest primary creditors. Having acquired debt from banks over the years, Aditya Birla ARC controls 33% of the debt. Among banks, UCO and Bank of India are the larger creditors with about 3.58% of debt.