PTC puts coal mine acquisition plan on back burner

PTC India Ltd, the country’s largest power trading company, has put its plan to acquire coal mines abroad on the back-burner. The move is guided by what the company calls regulatory uncertainty in the global coal market due to recent steps by resource-rich nations seeking market rates for their minerals.

“We have kept the plan to acquire mines overseas on the slow-burner because laws governing coal exports have been changing in other countries causing regulatory uncertainty,” PTC India Chairman Deepak Amitabh told Business Standard. He, however, added the company will still keep a watch on prospective deals though in a passive manner.

The power trader, facing intense competition from many small-sized new entrants in the trading market, had diversified into fuel intermediation business four years ago where PTC entered into long- term coal purchase and sale agreements with Independent Power Producers (IPPs). Of late, the company ventured into tolling where the company supplies coal and sells the power produced.

It imported 420,000 tonne of coal in 2011-12. It had set a target of importing two million tonne in the financial year ended March this year. To further secure its coal supplies, the company had identified mines in Indonesia and Australia. “We had earmarked Rs 300 crore specifically for this purpose in the current financial year. We were looking at small mines though there could be multiple models depending on our requirement,” Amitabh said, adding that in view of the regulatory changes, a “softer rather than aggressive approach” has now been chosen.

Experts said any move to go slow on acquisitions may not impact the company much. "Fuel intermediation was a diversification move by PTC India. The company was looking at coal trading as a separate business vertical. Also, while the company has taken up equity investments in some power plants, it is only a co-investor there. Therefore, in case PTC decides to go slow on acquisitions, it should not affect their core business," said Shubhranshu Patnaik, senior director at Deloitte Touche Tohmatsu India Ltd.