Damodar Valley Corporation (DVC), the state-owned power generation major, after a more than two-year hiatus has decided to float a Rs 170 crore bond issue.
Expected at the end of the fiscal, the bond will primarily replace DVC's high-cost central government loans.
Interest and principal payable to the government was close to Rs 170 crore which the power utility availed over the years to finance specific projects. "We have already sought the permission of the central government to float the bond and will probably hit the market by the end of the current fiscal," J Chatterjee, financial advisor of DVC, said. "We availed the loan at higher rates compared to the current lower rates," he said.
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"The loan along with higher rates of close to 17 per cent over the years has risen to Rs 170 crore, which we were planning to pay back prematurely to the government," Chatterjee said. "We have been talking to banks and financial consultants for sometime now and have decided to float the bond," he added.
Although DVC is yet to decide on the rate of interest, it is likely that the rate will be between 9 per cent and 10 per cent, said sources in the industry.
Meanwhile, DVC recorded a 37.19 per cent rise in profit before tax at Rs 332 crore against a Rs 2,284 crore turnover achieved in 2001-02. This translated into a Rs 190 crore net profit, which was arrived at after setting off deficits on irrigation and flood control and payment of tax against Rs 176 crore in the previous period.
Total receivables against supply of power was estimated at Rs 3,836 crore, of which Rs 3,083 crore was expected to be settled through the scheme of securitisation of the state electricity board.
During the year under review, DVC has invested in the equity of two joint ventures, Maithon Power Ltd (MPL) and Bokaro Power Supply Company Ltd (BPSCL). MPL was floated as a 50:50 joint venture with BSES. BPSCL operates the captive power plant and captive steam generation plant hived off by the Steel Authority of India at its Bokaro Steel Plant (BSP). DVC and BSP hold 50 per cent each in BPSCL.