With eye on increasing discom presence, Tata Power to raise capital limits

MUMBAI : Tata Power, India’s largest private power generation company, is eyeing expanding further into the electricity distribution business. To this end, the company has asked its shareholders to approve of raising its authorised share capital by ₹ 200 crore, giving it more headroom to raise equity for future investments.

While Tata Power has stated in the past that it will no longer invest in new thermal power assets; renewable energy and retail distribution of electricity are its new areas of focus.

In May, Union power minister Raj Kumar Singh announced that India will privatise all electricity distribution companies (discoms) in the Union Territories. Discoms in the union territories come under the administration of the central government while the respective state governments govern those in the states. This means that the discoms in Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, and Daman and Diu, Delhi, Jammu and Kashmir, Lakshadweep, Ladakh, and Puducherry will soon be up for grabs to the private sector.

Meanwhile, Anil Ambani’s Reliance Infrastructure has placed its 51% interest in its BSES Rajdhani Power and BSES Yamuna Power - two distribution circles in south and west Delhi - on the block. The assets are garnering interest from a host of investors, including Torrent Power, Italy’s Enel group and the public sector National Thermal Power Corporation.

Last December, Tata Power won a 25-year licence for distribution and retail supply of power in five circles in Odisha. The company also generates and distributes power in New Delhi, Mumbai and Ajmer.

In a note to shareholders, the company said it wants to alter its Memorandum of Association to increase the authorised share capital from the existing ₹ 579 crore (divided into 350 crore equity shares of Re 1 each and 2.29 crore cumulative redeemable preference shares of ₹ 100 each) to ₹ 779 crore by creating 200 crore additional equity shares of the same face value.

The company said it is “working on a long-term strategic plan to strengthen its balance sheet and to improve its overall return metrics. This includes divestment of certain investments, restructuring some businesses and participating in emerging opportunities in the power sector."