Tata Power to foray into shipping

Move to facilitate feedstock procurement for the company's power units

Tata Power, the country's largest private sector power company, plans to foray into the shipping and logistics business in order to facilitate coal procurement for its power plants. The Tata group's power arm also plans to raise Rs 4,000 crore from the international markets.

The proposed move would also mark the group's entry, which is present in a wide range of businesses from salt to steel, in the burgeoning shipping and logistics business.

Tata Power will raise Rs 4,000 crore either through sale of equity via the GDR route or issue of foreign currency convertible bonds (FCCB). The company had raised Rs 800 crore through FCCBs two years ago.

The company will seek the shareholders' approval for getting into the logistic business through a postal ballot.

Sources said an entry into the shipping business would help it reduce the cost of transporting coal from abroad. "With coal becoming scarce in the country, power utilities will have to rely more on imported coal from countries like Indonesia, China and other south Asian countries," said an industry analyst.

The company recently acquired 30 per cent stake in Indonesian coal firm, Bumi, and is eyeing more entities overseas. Singapore-government owned Tuas Power is reportedly on its radar.

According to sources, the company will quadruple its generation capacity from 2,400 mw in five years. "The targeted capacity will not be achieved without having a coal commitment from foreign countries. So, the entry into shipping business is actually a logical step forward," said an expert.

The company's major projects within the country include the 4,000 mw plant at Mundra, 1,050 mw at Maithon, 2,400 mw in Shahpur, Maharashtra and expansion of its Trombay capacity by 250 mw.

The Tata Power stock today closed 3.15 per cent lower at Rs 1,255 in a weak Mumbai market.