Tata Power may sell stakes in units

Written by Reuters | Mumbai, March 28: | Updated: Mar 28 2008, 21:10pm hrs
Indian power utility Tata Power Co Ltd may sell stakes in holding companies and assets to help fund its $6 billion capacity expansion plans, the company said in a presentation that was published on Friday.

Tata Power, India's oldest private power producer, plans to raise its power generation capacity by more than five times to nearly 13,000 megawatts by 2013, the company said in an analyst presentation sent to the stock exchange.

Managing director Prasad Menon made the presentation to analysts late on Thursday, a spokeswoman said.

Tata Power, which is part of India's salt-to-software Tata Group, is an electricity supplier in Mumbai, India's financial capital, and operates a distribution arm in Delhi.

The presentation showed the company would use 60 billion ($1.5 billion) rupees of internal funds and raise debt of 180 billion rupees ($4.5 billion) to pay for its expansion plans.

Tata Power said it had 29 billion rupees of funds in hand and had raised another 19 billion rupees through a preferential issue of warrants to Tata Sons Ltd, the group's holding company.

The remainder of the internal funds would be raised through "disinvestment of various holdings or assets" and "equity dilution through warrants, preferential issue and/or rights if required", Tata Power said.

The company said other debt would be raised in loans through domestic financial institutions, banks and capital markets, and foreign loans through credit agencies and multilateral agencies.

Shares in the company rose 3.6 percent to 1,211.15 rupees, their highest close since March 4, in a Mumbai market that rose 2.2 percent.

The company also said it had set up a unit in Singapore for acquiring ships for the transport and trading of coal. TPC Energy Asia Private Ltd would buy ships or enter into long-term contracts for charter hire of ships, and use spare capacity to transport other firms' cargoes.

Earlier this month, Menon had said the company may enter the coal shipping business to import more coal for its coastal power plants.

Last year Tata Power bought 30 percent stakes in two coal mines owned by Indonesia's largest coal producer, PT Bumi Resources, for more than $1 billion.

India plans to add more than 78,000 megawatts of capacity by setting up new power projects, mostly coal-fired, in the next five years.

India suffers a huge power shortage, with over 400 million of its 1.1 billion people having no access to electricity, according to the United Nations Human Development Report.

India and China will lead a 73 percent leap in world coal demand to 4,994 million tonnes of oil equivalent by 2030 and 2,892 million tonnes in 2005, the International Agency said in late 2007.