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Jindal brothers sign $976 million power deal

NEW DELHI: Sajjan Jindal's JSW Energy LtdBSE -0.30 % has agreed to buy a 1,000 megawatt power plant from his brother's heavily indebted Jindal Steel and Power LtdBSE -0.72 % in a deal valued at up to $976 million, the companies said on Wednesday.

Jindal Steel said the deal, to be completed by mid-2018, would help it meet its liabilities while JSW gained a foothold in coal-rich eastern India through the acquisition of the power plant in Chhattisgarh state.

The New Delhi-based steel firm majority-owned by Sajjan's younger brother Naveen will get more than 65 billion rupees ($976.29 million) from Mumbai's JSW if some conditions on coal supply and power purchase agreements are met, JSW said. JSW would also extend 5 billion rupees as advance against interest.

"The adverse operating environment within the power sector in the country is driving distress sales in the sector, and JSW Energy's robust financial health coupled with a strong balance sheet is providing the company an opportunity to acquire quality power assets at reasonable valuations..." JSW said.

While the deal, first reported by Reuters on Tuesday , would help reduce debt at Jindal Steel, it would also be a boon for top lender State Bank of India (SBI) which has been trying to broker an agreement between the companies. Indian banks are saddled with a corporate bad debt mountain of about $121 billion.

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