The R P Goenka-controlled power utility, CESC Ltd, is likely to approach ANZ Grindlays-led consortium of banks for a hike in its working capital by about 25 per cent to Rs 250 crore. The severely cash-strapped company would need the raise to meet its increasing expenditure.
CESC posted a Rs 66-crore loss for the first quarter of the current fiscal, mainly on account of an increase in expenditure. The loss would have swelled further in the full year 1998-99 but for the recent West Bengal government clearance for a 19 per cent gross tariff hike with effect from October 19.
In fact, the tariff hike would go a long way in getting the company, now saddled with a huge net loss, out of the red. A formal decision to approach the bank's consortium to enhance its working capital limit is yet to be taken by the board of directors, said a source. The company's working capital currently stands at Rs 200 crore.
Commercial banks and foreign banks, which are part of the consortium, include State Bank of India, American Express Bank, Union Bank of India, ABN Amro NV, UCO Bank, Allahabad Bank, Bank of Baroda, Indian Bank, Corporation Bank, Bank of India, Indian Overseas Bank, HongkongBank, ICICI Bank and HDFC Bank.
Over the years, the company's working capital limit has been raised from Rs 85 crore to Rs 170 crore. Last December, CESC had sought its bankers' approval to enhance the ceiling further to Rs 200 crore. The company skipped payout for 1997-98 and was off the dividend list for the first time in recent history.
While interest burden jumped to Rs 80 crore in the first quarter of 1998-99 against Rs 48 crore in the corresponding period of the last year, depreciation rose from Rs 20 crore to Rs 47 crore in the same period.
Interest and depreciation charges for the quarter under review have gone up owing to the additional impact of the commissioning of the first 250mw unit at Budge Budge power project. Company sources also attribute the power firm's dismal performance to inadequate tariff revision approved by the West Bengal government.
