Business Companies 23 Aug 2017 Tata Power to moneti ...

Tata Power to monetise non-core assets to trim debt

Published Aug 23, 2017, 8:50 pm IST
Updated Aug 23, 2017, 8:50 pm IST
Tata Power's gross debts stand at roughly Rs 48,816 crore.
Tata Power is planning to sell its non-core assets to bring down its debt.
 Tata Power is planning to sell its non-core assets to bring down its debt.

Mumbai: To bring down its around Rs 49,000 crore gross debt, private utility Tata Power is planning to sell its non-core assets even as it continues to explore viable options to resolve issues pertaining to the financially crippled 4,000-mw Coastal Gujarat Power at Mundra. 

"Our gross debt is Rs 48,816 crore. We are examining various debt reduction options including sale of non-core assets," Tata Power chairman N Chandrasekaran told shareholders at the 98th AGM here. 


The gross debt to equity ratio currently stands at 3.3:1, he added. He said the steep rise in global coal prices impacted the Gujarat plant and Tata Power is working on some resolution for solving the problems. 

It can be noted the company had made a proposal some time back to sell the 51 per cent stake in the plant to to Gujarat Urja Vikas Nigam for a notional Re 1, to rescue itself from the debt-laden, loss-making business but the state government rejected the proposal. 

The company also offered to operate the project subject to grant of compensatory tariff to the company for the entire period of the PPA. 


Though the company has PPA with the state electricity board it is not drawing power from the plant citing higher cost. The plant is running at a PLF of 70 per cent now. 

"On the issue of resolution of the compensatory tariff for CGPL, we approached all courts of appeal and continues to explore viable options to address the issues by continuous engagement with the power procurers and lenders," Chandrasekaran said. 

He said Tata Power has a natural hedge over the project because of the Indonesian coal mines.  "Nevertheless, we have made significant investments to the tune of close to USD 1.2 billion in the company. So we would like to solve this issue. 


"Currently, two kinds of resolutions are possible--one with the regulators and procurers and other is we get cheaper coal, which doesn't seem to be so far working," he added. 

Tata Power chief executive and managing director Anil Sardana said, "We are willing to forgo 51 per cent of equity provided the procurers are ready to make good the under- recovery. 

"We might give away about Rs 3,000 crore on equity, but what we stand to gain is every year an amount of Rs 1,000 -1,200 crore that the procurer will have to give us for the next 20 years. But they too have an advantage as they would get power for cheaper rate." 


The chairman further said the company has planned a capex of Rs 3,000 crore for FY19 and is also working towards simplification of its structure. 

"The company has over 90 subsidiaries and associate companies. We are working on a plan to simplify the corporate structure where feasible," he said. 

The Tata Power Group has an operating capacity of 10,463 mw, 98 per cent of which is tied up to long term PPAs. 

Its clean energy portfolio is 3,141 mw, or 30 per cent of the total capacity which the company plans to increase it to 40-45 per cent by 2022. 


On the international front, the Zambian, South African and Georgian JVs have started commercial operations, totalling 530 mw.