From Rivals To Partners: India's Industry Titans Ambani And Adani Forge Unexpected Collaboration In Captive Power Ventures - Here's Why

From Rivals To Partners: India's Industry Titans Ambani And Adani Forge Unexpected Collaboration In Captive Power Ventures - Here's Why

This agreement is not a game-changer but a smart move in the captive power game.

Oliviya KunjumonUpdated: Friday, March 29, 2024, 08:59 PM IST
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Gautam Adani, Chairman of the Adani Group (left) and Reliance Industries Limited (RIL) Chairman Mukesh Ambani | FPJ Photo

Could two giants in India's business landscape, Mukesh Ambani and Gautam Adani, long seen as rivals, actually join forces? This question has stirred curiosity as news of their collaboration in a power project in Madhya Pradesh emerged.

Let's take a closer look at what this unexpected partnership means for India's power scene.

World of Captive Power Ventures

Behind all the buzzwords lies a simple idea - captive power units. These are small power plants next to big factories, just there to keep the lights on. The recent deal between Adani Power Limited (APL) and Reliance Industries Limited (RIL) shows us how these ventures work.

Breaking Down the Deal

Forget the hype; this agreement is not a game-changer but a smart move in the captive power game. It is a 20-year deal for 500 MW of power under a policy that is already in place. It's more about business strategy rather than a groundbreaking event.

To get the perks of the rules, RIL buys a 26 per cent stake in the power unit, Mahan Energen Ltd (MEL). This investment ensures compliance while securing RIL's long-term access to reliable power supply. The regulatory framework plays a big part in how these partnerships come together.

Reliance will acquire 5 crore equity shares in MEL, a wholly owned subsidiary of Adani Power Ltd, valued at Rs 50 crore, and will utilise 500 MW of generation capacity for captive purposes, as announced in separate stock exchange filings by both companies.

Friendly or Strategic?

Some say this partnership shows the two giants getting along, but it is more about business smarts. They both want steady power for their factories, and this deal helps with that. It is less about friendship and more about keeping the lights on.

In the realm of business, alliances often defy expectations. The Adani-Ambani partnership in the power sector gives us a peek into how big players make moves. It is not just about rules; it is about making sure the lights stay on for factories. This small partnership between Adani and Ambani might just be the start of something bigger.

Shares

At 3:30 PM IST on Thursday, March 28, the last trading day of the fiscal year 2024, the shares of Reliance Industries Limited closed at Rs 2,970.30, marking a decrease of 0.50 per cent. Conversely, Adani Power closed the day at Rs 532.00, with an increase of 2.99 per cent.

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