Company to participate in auction of coal blocks, looks to acquire troubled power plants
Power producer CESC Ltd is planning to participate in the auctioning of coal blocks to be undertaken by the government following en masse de-allocation after Supreme Court order, chairman Sanjiv Goenka told dna.
The Kolkata-based power producer, which has just completed its first project outside Bengal, in Maharashtra, is also actively eyeing acquisition of troubled plants in a bid to expand its energy portfolio, Goenka said.
"You lose some, you win some. We would be participating in the coal block auctions as our blocks have been de-allocated," Goenka said after getting shareholders' approval to raise about $150 million on private placement to qualified institutional buyers to fund its ongoing and future projects and expansions.
CESC would be losing two coal blocks: Mahuagarhi and Sarshatali.
At the beginning of the year, CESC had four power stations, all in West Bengal, cumulatively producing 1,225 mw.
Its first power project outside West Bengal has been completed with the commissioning of its 600 mw plant at Chandrapur in Maharashtra in August, while another 600 mw power plant at Haldia is being commissioned.
CESC has been sourcing half of its coal requirement from Coal India linkages while the balance was being sourced from own sources or imports.
With the deallocation, CESC would now have to improve fuel security with the coming up of new projects.
Its coal requirement would also go up once it acquires new projects.
CESC is evaluating several proposals and the process of identification is on.
"We are looking at many troubled power projects but many of them are also very challenged. We would be very cautious while taking on such assets as they have to be viable. We had consciously stayed away from ultra mega power projects for this reason and looking back we don't think it was a bad decision. So, we would be cautious this time also," Goenka said.
To fund such inorganic as well as organic growth, CESC is now in lookout for raising fresh equity from institutional investors.
"The process is on. We were waiting for the resolution to be passed by the shareholders which has happened. So, now the process would be expedited.
We are carrying out roadshows across the globe, managing director Aniruddha Basu returned Friday night from one such roadshow," Goenka said.
During the roadshows, CESC management is believed to have told fund houses that with its current project commitments ending in fiscal 2015 and cash inflow commencing, the power producer will have a much stronger balance sheet to drive growth from fiscal 2016.
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