BC Jindal to list power venture

The BC Jindal Group, which has interests in verticals such as steel pipes and tubes, steel strips, galvanised sheets, photographic accessories, is planning to tap the capital markets for its power venture.

The group, which has three listed entities, will now be listing the fourth company — Jindal India Powertech Ltd (JIPL) — by the first quarter of the financial year 2011-12.

While the company officials could not be contacted, a source in the know said the size of the IPO could be between Rs800-1,000 crore.

“Though the size of the IPO is small but through the listing of the power arm, the other three listed companies under the BC Jindal banner and their shareholders will benefit, since all the listed entities of the group have substantial holding in the power arm,” said an analyst who did not wish to be named.

The analyst said the two major listed companies of the group — Jindal Photo and Jindal Polyfins — own substantial shares in JIPL, which, in turn, holds a 99.22% stake in Jindal India Thermal Power Ltd (JITPL), a company which is building the power plants for its holding firm JIPL. Consolidated Finvest is the third listed company of the group.

According to the company website, JITPL is targeting a power capacity of over 5,000 mw in the next five years and is currently building a 1,800 mw sub-critical thermal power plant in Angul district of Orissa.

While the first unit of 600 mw is expected to be operational by December 2010, the company has already achieved financial closure and other clearances for two units. The fuel-linkage is also in place.

The company is planning to build another plant of 1320 mw in the Angul district besides building a similar size plant in Chhattisgarh.

“The group is planning to file the DRHP once the first unit at Orissa gets operational so that it has something on ground to show to the investors,” said the source, adding that the company has also signed a memorandum of understanding to build a 2000 mw power plant in the Sasan district of MP and a 1,000 mw hydro power plant in North India.

In all, the company would require around Rs25,000 crore to commission its plants, most of which will be sold on a merchant basis. “Given that JIPL’s plant will be a merchant power plant, it gives substantial visibility in terms of its offtake agreements, has captive coal and the plants are located near the pithead,” he said.

The source said the company had plans for an IPO for a long time but later scrapped it because of a lacklustre market.

Later when JSW Energy got listed, Jindal Steel and Power Ltd announced plans to tap the market and several other power IPOs resurfaced. JIPL, too, felt it was the right time for it to go for an IP.

Besides their projects are also progressing faster.