PowerGrid Corporation of India (PGCIL), which is coming out with an initial public offer (IPO) on September 10, plans to temporarily park funds raised through the IPO in high interest-bearing liquid instruments, including bank deposits.
Plans to park IPO proceeds in liquid funds, use when needed
NEW DELHI: PowerGrid Corporation of India (PGCIL), which is coming out with an initial public offer (IPO) on September 10, plans to temporarily park funds raised through the IPO in high interest-bearing liquid instruments, including bank deposits.
The company has come out with a price band of Rs 44 to Rs 52 per equity share. This could raise Rs 1,683 crore at the lower end of the band and Rs 1,989 crore at the upper end.
"Funds raised so would be parked in a different account and withdrawal from it would be on an as-and-when basis," said a company executive. PGCIL has appointed Industrial Financial Corporation of India (IFCI) as the monitoring agency. The boards of IFCI and PGCIL would together monitor the utilisation of the net proceeds from the issue.
Its details would be declared in a separate statement, along with the results.
The temporary parking of funds would be monitored through a laid- down policy of the company board.
According to the company's offer document, net proceeds from the sale of 10% (of the pre-issue paid-up capital) fresh equity would be used for 15 identified power transmission projects.
The projects include strengthening of existing transmission lines or grid projects for establishing new transmission lines connecting new generating plants and one project for the implementation of the National Load Despatch Centre.
All these projects are expected to be over by September 2009. The company already has undrawn foreign debt currency facilities of Rs 2,358 crore as on July 31, 2007.
In fact, the total fund requirement for the projects is Rs 12,707.5 crore. Of this, Rs 5,862.8 crore has been spent, leaving a requirement of Rs 6,844.7 crore.
The company plans to spend Rs 3,547.8 crore during fiscal 2008, another Rs 2,631.7 crore in 2009, Rs 1,710.2 crore in 2010 and Rs 539.4 crore in 2011.
Out of the 15 identified transmission projects, seven are funded by the World Bank and the Asian Development Bank.
Transmission projects are those that carry electricity from the generation point through a network of high tension wires and transmission towers, called the grid, till the point where distribution begins.
They are typically implemented by breaking them down into packages.
The issue would constitute approximately 13.64% of the fully diluted post- issue capital of the company. After the issue, the Union government's equity share would come down to 86.36% of the diluted post-issue paid-up equity capital of the company.
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