The Tata Electric Companies (TEC) is understood to have finalised a deal to acquire four captive power plants belonging to Associated Cement Companies (ACC) at an estimated amount of Rs 220-240 crore.
The total capacity of these plants are reported to be close to 150 mw. Sources said that the four captive power plants to be acquired by TEC are located at Wadi in Karnataka, Kymore in MP, Chaibaza in Bihar and Jamul in MP.
In a faxed response, Cyrus Vevaina, finance director, TEC, played down the issue. He merely stated that the negotiations are at an advance stage. "The matters are at an advanced stage," Vevaina said. He has, however, confirmed having initiated a dialogue with ACC for acquiring these captive power plants.
"TEC is in discussions with ACC to establish more captive power stations for their cement plants at various locations," Vevaina said. Vevaina confirmed that the total capacity of the power plants, which the company is looking at, is approximately 150 mw. "The total capacity involved is approximately 150 mw," Vevaina said in his response.
The market seems to have sensed these developments. This is reflected in the stock price of ACC which has shot up during the past fortnight. The rise in stock price has been accompanied with rising volumes.
In early May, the stock was languishing at around Rs 1515 levels with just over three lakh shares being traded. Since then, the stock has made significant gains, and it touched a high of Rs 1846 on the BSE on Tuesday. During the same period, the number of shares traded has also shot up to close to four lakh shares.
ACC's captive power capacity in 1997 stood at 141 mw out of which 61 mw was based on diesel generation. The company intends to add another 50 mw to its existing capacity.
While it is yet not clear how TEC plans to fund its acquisition, it is likely that the company make use of the $300 million euro bond which it raised in September, 1997. TEC had raised this money to fund all its expansion plans which included the setting up of the 450 mw Bhivpuri generating plant.
Analysts have, however, expressed surprise at the cost that ACC has sold off these captive power plants. "The benchmark for such a deal should have been close to Rs 350 crore, and the amount TEC is reported to have paid is far less," commented an analyst with a leading FII.
TMM Nambiar, managing director, ACC, also refused to comment on these developments. He said the company will only comment once the deal is finalised.
Vevaina further said that TEC plans to expand its generating capacities in the licenced area as well as in any other appropriate projects in other states.
It is also known that ACC plans to increase the capacity at its Wadi plant to 4 million tonne from the current 2 million tonne. For this, the company will require to add another 60 mw to its capacity.
