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Reliance Energy, GVK Reddy eyeing Spectrum Power stake

Poornima Mohandas

Earlier in the year, after approaching the Supreme Court, the consortium of lenders removed the managing director and reconstituted the board of directors.

Mumbai , Nov. 23

RELIANCE Energy and the GVK Reddy group are in the race for acquiring 35 per cent stake in the Hyderabad-based, Spectrum Power Generation Ltd.

Banks and financial institutions led by Industrial Development Bank of India had been looking for strategic investors in Spectrum Power Generation Ltd (SPGL) since September. Both Reliance and GVK Reddy are interested in picking up the 35 per cent stake held by banks/FIs , a highly placed FI source said.

When contacted by Business Line, Reliance officials declined to comment on the development. GVK Reddy has a 456 MW power project in Jegurupadu, Andhra Pradesh.

The banks/FIs, comprising IDBI, Industrial Financial Corporation of India Ltd (IFCI), ICICI Bank, State Bank of India, UTI I, IIBI among others, with a combined exposure of about Rs 700 crore to the company acquired 35 per cent equity by converting part of their overdue debt into equity and are eager to sell the same. The money had been lent for the setting up of a 208 MW gas-based power project in Kakinada, Andhra Pradesh.

A headhunting mission is also under way for finding a new managing director to head the company. Earlier in the year, after approaching the Supreme Court, the consortium of lenders removed the managing director and reconstituted the board of directors. The board now has among others, two representatives from Rolls Royce, one from Spectrum Technologies USA and representatives from the various FIs/banks. In addition to the board, a committee of directors has also been constituted, said the source.

The defaulting promoters of the company are accused of having siphoned off funds and are dogged by litigation.

The company was earlier required to raise equity capital to the tune of over Rs 233 crore at the time of sanctioning of the loans by the FIs. However, the company was able to raise only Rs 117.93 crore.

As in March 2003, out of the equity of 117.93 crore, Bambino Agro Food Industries had invested Rs 32.69 crore, Spectrum Technologies USA had invested Rs 29.19 crore and Rolls Royce Rs 56.05 crore. Earlier in the year, one of the foreign promoters, Spectrum Technologies, (holding 25 per cent stake in SPGL) had stalled the annual general meeting of the company in Hyderabad.

The US-based promoter had maintained that the annual accounts of SPGL, which showed a profit of Rs 9.8 crore for 2000-01 and a profit of Rs 6.2 crore for 2001-02, are "consistently incorrect because there is an accumulated loss of Rs 130.37 crore as of year ending 2002." This calculation was arrived at based on SPGL adopting inaccurate project costs and tariff payments figures, the company had alleged.

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