Torrent eyes major stake in AEC

Ahmedabad Electricity company to raise rs 150 crore loan from IDFC

The Torrent group plans to pick a majority stake in Ahmedabad Electricity Company (AEC). The multi-diversified group already holds a 44.3 per cent stake in the company, which is likely to be renamed Torrent Power AEC Ltd.

AEC distributes power in Ahmedabad city and has an installed capacity of 490 MW.

Meanwhile, the AEC board on July 30 decided to seek a Rs 150 crore loan against mortgage of its assets and properties from Infrastructure Development Finance (IDFC) to augment its transmission and distribution network (TDN). AEC has also decided to enhance the borrowing power of the board up to Rs 1500 crore.

An AEC official said in Ahmedabad: "The reason for opting financial assistance from IDFC is to meet expenses for expanding our TDN, a sort of capital expenditure. If required, we may go for an expansion and so the directors have been empowered to borrow up to Rs 1500 crore. We also have applied before the Registrar of Companies for change of name of the company to Torrent Power AEC Ltd and we expect the new name would be in place in the next one month."

Well-placed sources close to the company said AEC may also opt for further loans from financial institutions as the Torrent group is readying to jump into power generation and distribution in a big way.

AEC plans expand its power generation capacity and is eyeing supply to areas beyond the geographical limit of Ahmedabad. The Torrent group is setting up a 1050 MW power plant near Surat and has created a new entity, called Torrent Power Generation Company Ltd, for the purpose.

"The Torrent group has been hiking its stake in AEC over the last one year. In September 2003, it hiked its holding in the company to 44.3 per cent from 39.5 per cent," sources said.

"With the setting up of the 100 MW gas-based combined cycle power plant at Vatva near Ahmedabad resumimg after being dormant for three years, the Torrent promoters have every reason to hike their stake in AEC. They may be eyeing the 6.5 per cent stake held by the Government of Gujarat in AEC," said the source.

With the Vatva plant getting gas supply from Guajrat State Petroleum Corporation, AEC would be able to produce an additional 20 lakh units of electricity.

The Torrent group also runs the Rs 1100-crore Torrent Pharmaceuticals Ltd (TPL) and holds a majority stake in Surat Electricity Company (SEC), which is responsible for power distribution in Surat city.

At the end of the first quarter of the current fiscal year, AEC reported net sales of Rs 348.59 crore and a profit after tax (PAT)of Rs 15.87 crore.