Financial Daily from THE HINDU group of publications
Friday, Jun 18, 2004

Cross Currency

Group Sites

Corporate - Restructuring

CESC plans to retire part of debt to bring down interest costs

Indrani Dutta

Kolkata , June 17

CESC is planning to go in for some refinancing, retiring a part of its debts and thus bringing down interest costs, company sources said.

They said that about Rs 300 crore of debt, out of a total borrowing of about Rs 2,800 crore was proposed to be replaced by cheaper financing. The refinance exercise is likely to be concluded in the later half of 2004-05.

"Following the debt recast exercise concluded last year, interest rates were reduced by an average of 5 per cent on rupee loans and has now come to settle at a rate of about 13.5 per cent. The company is now trying to retire a part of its debt and get refinancing at about 10.5 per cent," sources said.

The debt restructuring, concluded in November 2003, also entailed a moratorium on principal payment and an extension of loan tenor by three years. This has already resulted in a 13 per cent drop in CESC debt-servicing costs in 2003-04 compared to 2002-03. Annual outgo on this account stood at Rs 344 crore.

"We are looking at a further drop in this figure," sources said, adding that under the debt recast, CESC can refinance costly loans by taking refinance loan and also prepay loans without attracting any premium.

Sources said that CESC's high loan burden was because of high interest rate on the loans taken for implementing the 500 MW Budgebudge project, as well as delay in tariff decisions.

CESC now has four generating stations with an installed capacity of 1005 MW and a base of over 18-lakh consumers spread over its 567 square km licence area in the city and its vicinity.

On the recent coal price hike, sources said that this would push up costs and might lead to a further increase in tariffs. "There is a set formula for this and the amount of increase will be determined by the West Bengal Electricity Regulatory Commission (WBERC)," sources said, while admitting that CESC's margins would come under pressure on this account.

CESC's annual fuel cost is about Rs 650 crore out of a total expenditure of about Rs 2,000 crore.

On the recent CESC tariff review order for three years beginning 2002-03, sources said that the WBERC fixed an average tariff of Rs 4.03 per unit against the present rate of Rs 4.15 per unit.

Sources admitted that this order has helped the RPG-controlled utility to enhance its competitiveness in the post-Electricity Act, 2003 scenario, which provided for `free access' to any consumer to get electricity from any source or even set up his own captive sets.

About 42 per cent of CESC's total consumers who are high-tension consumers will enjoy lower tariffs on account of the recent WBERC order, sources said.

More Stories on : Restructuring | Power

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Welspun Gujarat bags Rs 407-cr Libyan order

BILT plans to increase farm forestry coverage programme
Bata assures shareholders on revamp plan — Batanagar model township work to begin by November
Paranjape Constructions to spread wings abroad
BHEL bags RUVNL Dholpur power project
EIL plans to bid for Delhi, Mumbai airports
Coal India to discontinue selling directly to non-core sectors
NBFAL bags `Clean' award
CESC plans to retire part of debt to bring down interest costs
Sterlite keen on acquiring residual Govt stake in Balco
Hewitt Associates merges with Exult
Kakinada to get bio-diesel plant
IMG Academies unveils master plan for sports complex
Ramco Industries to set up Rs 17-cr fibre cement sheet unit in Kutch — Net profit up 30 pc; to pay 75 pc final
Sneha Media ties up with TV9 for news content
Jagsonpal Pharma announces 3:1 bonus
Coking coal crunch shrinks SAIL sales

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line