Sterlite Power Demerges Transmission & Products Business

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Sterlite Power Transmission Limited (SPTL), a power transmission developer and solutions provider in India and Brazil, has announced the strategic decision to demerge its power transmission infrastructure business (BOT model), spread across India and Brazil. The demerged SPTL entity will continue to hold the global products and specialised EPC services business as well as the Convergence – Fiberco business.

This move comes as part of the firm’s intent to create ‘pure play’ business verticals based on their end-customer base, investor class and returns.

Commenting on the development Pratik Agrawal, Managing Director, Sterlite Power Transmission Limited, said, “The demerger will enable both entities to create independent capital structures, unlock value and attract investors suitable for the distinct growth profiles for each entity. We are confident that this will bring substantial value for our shareholders and help us in creating two world class business entities.”

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Globally, the power transmission network is expected to double in the next eight years to meet aggressive renewable energy additions. The demand for power products is expected to remain strong over the medium term on the back of healthy demand, amid aggressive global capex earmarked for renewables capacity addition, T&D expansion, benefits from ‘China+1’ theme and favourable tariff structures in the US.

The power transmission infrastructure business encompasses the transmission assets in India and Brazil, which will now be transferred to Sterlite Grid 5 Limited (SGL 5). Both SPTL and SGL5 will have independent Boards and focused executive management teams. Under the Board of Directors-approved demerger scheme, existing Sterlite Power shareholders will receive one additional share of SGL5 for every share of SPTL they hold.

The company has filed the demerger scheme with National Company Law Tribunal (NCLT) Mumbai for approval. The approval process is expected to be concluded within the next six to eight months, as it entails securing a range of approvals, including those from shareholders, creditors, and various regulatory authorities.

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Sterlite Power boasts a robust portfolio of 32 completed, sold and under construction projects covering approximately 15,350 circuit kilometers of transmission lines across India and Brazil. It claims to be the first transmission player to launch InvIT in the power sector, listed on the BSE Limited and the National Stock Exchange of India Limited.

The firm has also announced the acquisition of Beawar Transmission Limited, a Special Purpose Vehicle (SPV) from REC Power Development and Consultancy Limited- a wholly owned subsidiary of Rural Electricity Corporation. The project was awarded to Sterlite Power through the Tariff Based Competitive Bidding (TBCB) process in August 2023. It also secured an order for Rajasthan Phase-III (20 GW), Part F Transmission project. Last month, Sterlite Power commissioned a transmission project in Brazil. It secured multiple new orders worth Rs 1400 crores across its solutions business that caters to products and specialized EPC, during the last quarter of FY 2023. These new orders, which were won across domestic and international markets, have strengthened the firm’s total order book for the business unit to INR 5200 crores for the entire FY ’23.