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CESC appoints BCG to decide on power sector push

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CESC Ltd has appointed Boston Consulting Group to advice it on which of the energy sectors -- thermal, solar or wind or hydel – to focus on.

While it is predominantly in thermal, the company has recently ventured into other areas as well.

"We can't grow everywhere, so we have given mandate to BCG to suggest us which areas in the power sector we should focus, concentrate and grow in the next five to seven years. There are opportunities galore and in each of the sectors – thermal, hydel and solar – we have performed well but it is not possible for us to keep investing in all these at the same time," group chairman Sanjiv Goenka told reporters after the annual general meeting of CESC on Wednesday.

BCG, which was appointed two days ago, would submit a report in the next six months. "We have also told them to suggest within sectors what are the areas to focus on. Say, within thermal, should we grow more in distribution than in generation?"

In thermal, CESC currently generates from four power stations, all in West Bengal, cumulatively producing 1,225 mw. Among the new projects, a 600 mw power plant at Haldia would be commissioned in October while arm Dhariwal Infrastructure Ltd's Chandrapur project in Maharashtra commissioned the first 300 mw in February and the second unit is likely to get started soon.

"The second boiler of Haldia has been fired and we plan to commission it ahead of our original schedule of January."

Goenka clarified that the purpose of the study is not to find out whether CESC should shift away from thermal power, its mainstay, but to decide its investment plans weighing the opportunities in other energy sectors as well.

"We are enthused with the coming of the new government. It's for the first time that we are seeing the central government taking a proactive solution-based approach for the resolution of the immense problems that the thermal sector bases," Goenka said.

Apart from Haldia and Chandrapur, CESC has long standing proposals to set up power projects like 1,320 mw at Denkanal in Odisha, 2,000 mw in Bhagalpur in Bihar, stuck due to absence of government clearances.

Beyond thermal, CESC has 24 mw wind power in Rajasthan while another 26 mw is being set up in Gujarat.

In hydro, it has acquired 135 mw capacities in Arunachal Pradesh while another 90 mw capacity is being built. It also has solar projects in Gujarat and Rajasthan.

These apart, CESC sometime back got the distribution licence for Ranchi, which however is yet to take off due to a reported rethink by the Jharkhand government on awarding the licence.

"While each of these sectors would throw up enough opportunities under the new government, we can't be everywhere so we need to focus."

Spencer's Retail and Firstsource Solutions are also under CESC, though they operate under separate subsidiaries.

It's retail venture has improved its store level operating profit to Rs 1,341 per square foot in the June quarter from Rs 1,308 a sq ft a year ago although it continues to bleed at the net level.

"We plan to add 3 lakh sq ft of trading area in Spencer's Retail this fiscal to 10.5 lakh sq ft we have now," he said.

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