CESC scouting for coal mine overseas

CESC, the power utility firm run by RPG Enterprises, is scouting for a coal mine overseas and power companies in India.

The company is exploring coal mines in Australia and South Africa and is open to buying a mine that would yield 30-500 million tonne per annum.

It has already explored six such acquisition options in Indonesia but stated reserves for these mines have been much higher than the actual reserves.

CESC’s move has been prompted by rising coal prices and an anticipated increase in power demand in the country.

Also, RPG is in talks with three private equity players for sale up to 20% in its retail venture, Spencer’s Retail. All the three funds the company is talking to have a presence in India.

CESC is also open to more acquisitions after buying a majority stake in Dhariwal Infrastructure, which is setting up the 600 mw thermal power project in Chandrapur, Maharashtra.

RPG vice-chairman Sanjiv Goenka said that CESC is open to acquiring a local power firm that can produce 300-2,000 megawatt.

Goenka said CESC could also join hands with another player for the mine acquisition. “It all depends on the quality of the coal and how deep the mining needs to be done. It’s at an experimental stage. Unless the due diligence is done, we can’t be sure on this,” he said.
Goenka said that the financial closure for the 600 mw project in Maharashtra will happen by November 9. All the clearances as well as 450 acres of land from Maharashtra Industrial Development Corporation are in place.

CESC had also bid for the 350 mw power distribution project for Patna city. Goenka said that initially two companies had been shortlisted but now a third contractor has entered the picture. CESC will file a writ petition against the admissibility of the third contractor, which, according to Goenka, does not qualify to be shortlisted.

CESC’s sales during the second quarter grew 3.9%. To meet sales growth, additional import of power became necessary, resulting in the power purchase costs going up 52% over the same quarter in the previous fiscal. However, due to rise in tax rates, net profit went up marginally to Rs 126 crore from Rs 124 crore in second quarter of the last fiscal.