Five years after it bought 30% stake in two coal companies owned by Indonesia’s Bumi Resources, Tata Power has bought a 26% stake in another Indonesian mine owner PT Baramulti Suksessarana Tbk (BSSR) to secure fuel for its imported coal-based thermal power stations.
An analyst of a foreign brokerage told DNA that Tata Power already has a long-term off-take agreement with BSSR.
While the company did not disclose the price, according to the closing price on Thursday, BSSR is valued at $527 million. That would mean $130 million-odd for the 26% stake.
“BSSR came out with an IPO recently in which Tata Power bought stake during the book-building exercise, which shows that the company is very much interested in coal trading business,” he said.
He said Tata Power currently draws 40% of its valuation on the back of its coal assets.
“It is clear that Tata Power’s current requirement for imported coal is much less than the reserves it holds in the Indonesian mines in proportion to its stakes in them,” he said.
Another analyst with a domestic brokerage said Tata Power had overseas coal assets more than its requirement for its plants. For Mundra project, Tata Power requires 12 million tonne (mt) imported coal annually, while another 4 mt imported coal would be required by other power projects.
“A 30% stake in Bumi’s Indonesian mine will be equivalent to 21 mt for Tata Power, as 70 mt is the expected production from this mine. The 26% stake in BSSR would be equivalent to another 1.5 mt annually, which would add to the revenue of Tata Power on the back of coal trading,” he said.
Anil Sardana, managing director, Tata Power, in a recent media interview, said Tata Power would consume 10 mt fuel by the end of this fiscal and will look to securitise 50 mt by 2020.