CESC wants to shift focus to power distribution

By: |
Published: July 29, 2017 5:46:04 AM

After splitting CESC into CESC Generation, CESC Spencer’s Retail and CESC Ventures, RP Sanjiv Goenka Group chairman on Friday after the annual general meeting said he was looking to recast his businesses.

CESC, CESC Spencer’s Retail, CESC Ventures, RP Sanjiv Goenka, CESC Generation, CESC’s total distribution revenue, hydro projects, Yumm brand To tap the food segment, the RP Sanjiv Goenka Group acquired 70% stake in Gujarat snack company Evita for Rs 440 crore.

After splitting CESC into CESC Generation, CESC Spencer’s Retail and CESC Ventures, RP Sanjiv Goenka Group chairman on Friday after the annual general meeting said he was looking to recast his businesses. He wants to shift focus from generation to distribution in the power segment and grow both organically and inorganically in the food business. CESC has already picked up a 70% stake in Gujarat snack company Evita for Rs 440 crore to help it tap the mass segment. Spencer’s retail also plans to add another 1.5 lakh sq ft of retail space to achieve break-even in the first quarter this fiscal. The distribution business has been kept within the folds of CESC. Goenka said the company was looking aggressively to expand into distribution either via the franchise route or licensee route. The company was in talks with several state governments. “Uttar Pradesh can be a good state under Yogi Adityanath for getting into distribution,” Goenka said.

The company is already present in Greater Noida, Kolkata and Kota with its distribution network. Of its Rs 8,000-crore revenue from the power business, distribution makes for 85%. “We expect to earn Rs 1,300-crore revenue from power distribution at Kota in Rajasthan in FY18. This revenue would come in an operation of 10 months covering an area of 381 sq kms with peak load of 371 MW. This revenue would be 16-17% of CESC’s total distribution revenue,” Goenka said, adding the company has spent Rs 5,000 crore over a period of four years to augment distribution network in Kolkata. It will put Rs 1,000 crore in power business in the next one year utilising the chunk of it in augmenting distribution network.

While the company has decided not to move aggressively with its solar and wind plans, which at present generates 18 MW and 156 MW, respectively, it is looks to exit from the two hydro projects, Pappu and Manchu in Arunachal Pradesh. Meanwhile, in the food business, CESC Ventures is looking to set up its own manufacturing facility. It is looking for sheds across states to set up a factory. “It would require little money — around Rs 150 crore — to set up the unit,” Goenka said.

CESC ventures would continue to manufacture and market Evita, which makes and distributes snack items at a price point of Rs 5, products with the same brand name and at the same price point. The Too Yumm brand of snacks would be products of mid-price range, while the company would make organic food products to be distributed at a higher price range. The company might use the Spencer’s Retail network, which has already achieved break-even, to distribute its snack item.

For latest coverage on Maharashtra Assembly Election 2019 and Haryana Assembly Election 2019, log on to financialexpress.com. We bring you full coverage of Assembly Election 2019 on Financial Express, stay tuned for latest election updates.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.