Mumbai: Ashoka Buildcon Limited has received a Letter of Intent from REC Power Development and Consultancy Limited for a major power transmission project in Maharashtra.
The project involves setting up a 400/220/132 kilovolt air-insulated substation at Sakoli in Bhandara district. It was awarded through tariff-based competitive bidding, the company said in a stock exchange filing on August 13.
Under the agreement, Ashoka Buildcon will receive annual transmission charges of Rs 1,265.37 million, or about Rs 126.54 crore, for 35 years. The long operating period gives the company a steady revenue opportunity after construction is completed.
Construction Timeline
The company must complete the project within 24 months. After that, it will operate and maintain the transmission asset for 35 years, according to the filing.
The project has been awarded by a domestic entity and will be carried out in India. The new substation is expected to support the power transmission network around Sakoli and the wider Bhandara region.
Bank Guarantee
A key condition requires Ashoka Buildcon to submit a performance bank guarantee of Rs 16.70 crore within 10 days from the date of the Letter of Intent.
A performance bank guarantee protects the project-awarding body if the selected company fails to meet agreed terms. It is commonly required for large infrastructure contracts.
No Related-Party Link
Ashoka Buildcon said its promoters, promoter group and group companies have no interest in REC Power Development and Consultancy Limited. It also said the contract does not fall under related-party transactions.
The company disclosed the development under Regulation 30 of the Securities and Exchange Board of India’s listing rules. It added that the trading window for designated persons and their immediate relatives will remain closed until 48 hours after the declaration.
The Letter of Intent confirms Ashoka Buildcon as the selected bidder, subject to the stated conditions and further steps needed to execute the project.
The development adds to Ashoka Buildcon’s portfolio of long-term, large infrastructure and power-sector projects across the country.
Disclaimer: This article is based on company disclosures and is for information only; investors should consult certified advisers before making decisions.
