by Orient Cement Says MoU with Adani Power Maharashtra Stands Terminated
Orient Cement, a leading cement manufacturer in India, recently announced the termination of its memorandum of understanding (MoU) with Adani Power Maharashtra Limited (APML). The MoU was signed in August 2018 with an objective to evaluate the possibility of setting up a thermal power plant in the state of Maharashtra. In this article, we will take a closer look at the reasons behind the termination of the MoU and its impact on the two companies.
Reasons for Termination
Orient Cement and Adani Power Maharashtra had signed the MoU with the aim of exploring opportunities to set up a 50 MW (mega watt) coal-based thermal power plant in the Indian state of Maharashtra. The project was expected to be executed under a joint venture (JV) arrangement. However, in a recent filing with the Bombay Stock Exchange (BSE), Orient Cement stated that the MoU has been terminated by mutual consent of both parties.
While the reasons for the termination of the MoU have not been explicitly stated, it is believed that the decision was taken due to various challenges that the two companies were facing in executing the project. These challenges include issues related to the availability of land, fuel supply, and financing.
Impact on Orient Cement and Adani Power Maharashtra
The termination of the MoU is likely to have a limited impact on Orient Cement’s business operations. The company is primarily engaged in the manufacturing and sale of cement, and the thermal power plant project was only a part of its long-term growth strategy.
On the other hand, the impact on Adani Power Maharashtra is expected to be relatively greater. Adani Power Maharashtra is a subsidiary of Adani Power Limited, one of the largest power companies in India. The termination of the MoU is likely to hamper the company’s plans to expand its thermal power generation capacity in Maharashtra.
Conclusion
The termination of the MoU between Orient Cement and Adani Power Maharashtra highlights the challenges faced by companies in the power and cement sectors in India. While the two companies had signed the MoU with the aim of setting up a thermal power plant, they faced several obstacles in executing the project. The termination of the MoU is likely to have a limited impact on Orient Cement, while Adani Power Maharashtra is expected to be more affected. The termination also highlights the need for companies to carefully evaluate the feasibility of joint ventures and partnerships before embarking on large-scale projects.
