Adani Power has bought Lanco Infratech’s power plant in Udupi, in the Indian state of Karnataka, for Rs60bn ($982m).

Lanco will receive Rs20bn ($327m) in cash while Adani will take over its debt of Rs40bn as part of the deal.

Lanco Infratech said in a statement: "This transaction will support the company in reducing its debt and will enable Lanco to receive about Rs20bn as cash and additionally, Adani Power will take Udupi Power’s long-time debt of around Rs40bn."

Lanco has consolidated debt of around Rs350bn ($6bn).

The Udupi coal-based power plant has two units of 600MW capacity each, and a dedicated 400kV transmission line. An expansion of the plant is on cards to increase the capacity to 2,500MW.

The plant has long-term power purchase agreements in place to supply 90% of electricity to Karnataka and 10% to the state of Punjab.

The coal used in the plant is 100% imported. It has a captive jetty with an annual capacity of four million tonnes in the New Mangalore Port Trust and an external coal handling system.

"The acquisition is the second major deal in the country’s power sector within weeks."

Termed to be the biggest thermal power deal in India, the purchase will increase Adani Power’s capacity to 10,000MW.

According to local media reports, Adani managed to finalise the deal within two weeks of negotiations, beating bids from JSW Energy and an unidentified Malaysian company.

The purchase follows the approval of the Australian Government for Adani’s Carmichael coal mine project in May. The company plans to ship coal from the mine to its power plants in India.

The acquisition is the second major deal in the country’s power sector within weeks, after Reliance Power announced the purchase of hydropower assets of Jaypee group.

Image: Lanco’s Udupi power plant has a capacity of 1,200MW. Photo: © Lanco Group.