Financial Daily from THE HINDU group of publications
Saturday, May 14, 2005
Financial Daily from THE HINDU group of publications Saturday, May 14, 2005 |
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Industry & Economy
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Power Markets - IPOs PowerGrid plans IPO in Sept — Likely to offer 10 pc equity Our Bureau
Mr R.P. Singh, Chairman and Managing Director of Power Grid Corporation, addressing a press conference in the Capital on Friday. - Kamal Narang
New Delhi , May 13 THE State-owned Power Grid Corporation of India Ltd (PGCIL), the country's largest power transmission company, is planning to come out with an initial public offering (IPO) of shares in September. "We are open to an IPO. We are in discussion with the Government for offering 10 per cent of the equity in an IPO," the Chairman and Managing Director, Mr R.P. Singh, told reporters hereon Friday. The company has an equity base of Rs 3,200 crore and a fresh equity of 10 per cent would mean the corporation could raise about Rs 320 crore on a face value of Re 1 share. On the issue of the tentative price band for the offer, Mr Singh said: "I think it could be around Rs 45-46 per share." The price band would, however, be decided later in consultations with the Government and merchant bankers, he added. Mr Singh said the utility planned to follow the IPO model of National Thermal Power Corporation but declined to comment whether the Government will also divest an equal amount of equity along with the issue of fresh shares. NTPC had issued 5.25 per cent new shares while the Government also divested 5.25 per cent of its stake in the company simultaneously. Meanwhile, PGCIL has reported a dip in profits at Rs 725 crore during the last fiscal, mainly due to the downward revision in return on equity by the Central Electricity Regulatory Commission. PGCIL had recorded a net profit of Rs 748 crore in 2003-04. "Turnover and, hence, profitability of the company has been adversely affected following the downward revision in return on equity (from 16 to 14 per cent), reduced norms for operation and maintenance charges and transmission incentive," Mr Singh said. The company recorded a turnover of Rs 2,788 crore during 2004-05, compared with Rs 2,805 crore during 2003-04. He said the company has been able to offset the reduction in turnover and profit by increasing the consultancy income, revenue from telecom business and additional capitalisation of new transmission assets. Mr Singh said the company undertook capital investment of Rs 3,221 crore in 2004-05 — an increase of Rs 800 crore (33 per cent) compared with Rs 2,421 crore in 2003-04. For new capital investment, the utility company mobilised Rs 995 crore from the domestic market through loans and bonds. He said a loan assistance of $400 million from the Asian Development Bank has been negotiated to facilitate funding of new transmission projects. An appraisal process for a new loan assistance of $400 million from the World Bank has been completed and negotiation process will start soon, Mr Singh said.
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