The Hindu Business Line : Damodar Valley appoints KPMG for rejig

Plans ahead
KPMG will submit a report recommending ways to create a new structure without amendment to the existing DVC Act.
The IPO is to finance DVC’s plan to emerge as one of the largest power producer by the end of the XI Plan.

Pratim Ranjan Bose

Kolkata, Jan. 24 The Rs 4,300-crore Damodar Valley Corporation (DVC) has appointed KPMG to facilitate organisational restructuring by way of creating a corporate entity under the corporation and paving the way to tap the capital market through an IPO.

As per the Letter of Intent (LoI) issued by the DVC last week, KPMG will enjoy a “handholding relationship” with DVC till the IPO and will be responsible for recommending ways and means for restructuring, facilitating compliance of all legal formalities for the same and finally determining the issue size, timing and other details pertinent to the IPO.

To begin with, KPMG will submit a report within three months recommending ways to create a new structure without requiring any amendment to the existing DVC Act. The entire focus would be to let DVC enjoy the benefit of the two worlds. The IPO route is explored primarily to finance DVC’s plan to emerge as one of the largest power producer by the end of the XI Plan.

Thermal projects

DVC has already adopted a number of thermal projects to augment generation capacity from 2,210 MW to 9,510 MW by 2010-11. All the new projects are tied up with the 2011 Asian Games and are under different stages of implementation. In addition, DVC has recently sought approval for further capacity addition of 5,000 MW during the XI Plan period.

While the exact nature of the proposed organisational restructuring will emerge following submission of the KPMG report, sources said that preliminary discussions suggest that one or more corporate entities will be created under the Damodar Valley Corporation.

The corporation will promote a company controlling its new thermal projects. This company will tap the capital market to meet the fund requirements. The old generation capacities including both thermal and hydel coupled with the corporation’s responsibilities in the fields of irrigation, soil conservation and others may be fulfilled by the existing set up governed by the DVC Act.

“The proposed restructuring has to be approved by all three stakeholders of DVC including the State Governments of West Bengal and Jharkhand and the Centre. Naturally, we may have to wait at least a year before the process is through,” a DVC official said.

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