The state-owned NHPC Limited recently announced on Tuesday, April 23, that it has finalized a supplementary joint venture agreement (SJVA) with its joint venture (JV) partners to divest its stake in National High Power Test Laboratory Limited (NHPTL).
What’s in Agreement
The agreement was signed on the 23rd of April 2024, facilitating the sale of a partial stake in NHPTL which is an unlisted company. NHPC, along with JV partners including NTPC, Power Grid, Damodar Valley Corporation (DVC), Central Power Institute (CRI) and NHTPL itself is involved in this strategic move.
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Transaction Details
Under the agreement terms, NHPC will sell 1,31,63,750 shares to PowerGrid Corporation of India Ltd (PGCIL) at a notional total consideration of INR 1. PGCIL, an existing promoter of NHPTL, is a Schedule ‘A’ and ‘Maharatna’ Public Sector Enterprise under the Ministry of Power.
Financial Snapshot
NHPC disclosed that as of March 31, 2023, NHPTL recorded a total revenue of INR 2023.11 lakh, while its net worth was reported as negative, amounting to INR 18953.15 lakh during the same period. NHPC currently holds a 20% share in NHPTL. According to the stock exchange filing, Power Grid will have about 50% equity in the company after the sale. Earlier, each of the 5 JV partners held a 20% stake. Now, the remaining 4 partners – NHPC, NTPC, DVC and CPRI – will each hold a 12.5% stake.
The objective of the joint venture is to set up an online high-power short circuit test facility, which will be a completely independent professionally managed stand-alone test facility in India. It will provide a complete range of short circuit testing to the electrical equipment manufacturing industry and power supply utilities in conformance with Indian and International standards.
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Impact and Implications
Despite being exempted from being classified as a related party transaction under the Companies Act, 2013 due to the involvement of government entities, the transaction is not expected to have a material impact on NHPC Limited. However, after completion, NHPTL will no longer be considered a subsidiary of NHPC Limited.
Disclaimer
The content of this article is only for informational purposes and we do not offer any investment advice from our end. Please consult a SEBI-registered investment advisor before making any investment decision. The information does not necessarily reflect the views/opinions of the publisher.
