GE Power India To Sell Hydro And Gas Power Business Through Slump Sale

GE Power India Ltd. is selling its hydro business and gas power business through a slump sale. Through the sale, the company is looking to restructure its business.

The hydro business will be sold to GE Power Electronics (India) Pvt. and the gas power business will be sold to GE Renewable Energy Technologies Pvt., the company announced through an exchange filing on Wednesday.

The slump sale is subject to the prior consent of the members of the company and other regulatory approvals.

Divesting the existing businesses will help GE Power India focus on service growth, retain share in service upgrades, participate in margin and cash-accretive FGD (flue gas desulfurization), increase the Durgapur load by supplying boiler OEM (original equipment manufacturer) parts outside India, fabricate industrial equipment and leverage the factory’s core competencies.

GE Power India is selling its hydro business units to GE Power Electronics at a premium of Rs 100.19 crore over the fair market value determined by the independent valuer. The sale is expected to be completed in the last quarter of this fiscal.

The transaction will also reduce the company’s non-fund credit line exposure to the extent of Rs 698.8 crore, since GE Power Electronics will also be taking over net liabilities amounting to Rs 214.09 crore, driven by negative new working capital and a net debt position of Rs 114.35 crore.

The hydro business will further need around Rs 489.77 crore over the next two years, and this created pressure on cash consumption and the debt position of the company, it said.

Both GE Power India and GE Power Electronics are subsidiaries of the holding company, GE Vernova.

GE Power India is selling its gas power business units to GE Renewable Energy Technologies at a lump sum of Rs 43.86 crore, excluding all applicable taxes. The sale is expected to be completed by September 2024.

The company is selling the gas power business due to its outstanding current liabilities. The gas power business has a net liability of Rs 38 crore as of March 31, 2024. The sale will improve the net worth of the company by Rs 81.86 crore.

"To facilitate future profitable growth, it is necessary to take certain immediate actions to improve the company’s net worth," it said in the regulatory filing.

The gas power business mainly consists of project management and engineering services provided by GE Power India, primarily for new construction sites.

GE Renewable Energy Technologies is an indirect, wholly owned subsidiary of the holding company, GE Vernova.

Shares of GE Power India closed 11.27% higher at Rs 597.45 apiece, as compared to a 0.45% decline in the NSE Nifty 50.