Talk persists that the firm is on the block; power generation 'could improve valuations'
The first 300 mw unit of GMR Emco Energy Limited, the Warora, Nagpur-based 600 mw (2x300) electricity firm of infrastructure major GMR, has begun commercial generation, further intensifying talk that it may be on the block.
Industry observers said commercial generation may well help improve the valuation of GMR Emco.
The unit, acquired from Emco, is GMR’s first coal-based power plant to commence commercial generation.
The 300 mw unit was synchronized with the grid on December 10. Its power is being evacuated to the Bhadravati sub-station of Power Grid Corporation.
“The entire production is committed to the power purchase agreements that have been signed,” the company said in a statement.... Work on commissioning the second 300 mw unit is in advanced stages and will be commissioned in the first half of” next fiscal, the company said.
However, the first unit is yet to start receiving coal under the fuel supply agreement that the firm had signed with the Singareni Collieries Company Limited.
“Coal supply is expected to begin shortly. For now, we are getting coal from the open market, including e-auction,” said a company source.
G M Rao, chairman of the GMR group, said, “This (commencement of power generation at GMR Emco) is one more example of our commitment to on-time delivery of projects, which will now generate revenue and enhance our shareholder value.”
There has been talk that the GMR group is keen to divest its holdings in some of its units, including GMR Emco, in order to lighten its debt burden. GMR, which had a gross debt of about Rs43,000 crore by December-end, has denied any such sale plans.
But sources, however, maintain that the company has been in touch with investment bankers to put GMR Emco on the block.
“Now that the unit has started generation, it should yield better valuation. After all, the group has been adopting a strategy of lightening its assets,” a source said.
@ramanakv
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