Tata Power Company hopes to raise about Rs 3,000 crore from the divestment of non-core operations and restructuring the renewable energy business with an aim to cut debt by at around 40% this financial year.
The company, which has an installed capacity of 12,742 megawatts, hopes to raise the divestment proceeds despite the disruption caused by the pandemic, in the global economy, Chief Executive Officer and Managing Director Praveer Sinha told ET.
“Our attempt is to reduce the debt to the levels of Rs 25,000 crore by the end of this fiscal year from Rs 44,000 crore; it is an indicative target. We are looking at various means to do it. We have already started our divestment process,” Sinha said.
In April, Tata Power Company completed the sale of its 50% stake in South African wind power company Cennergi to joint venture partner Exxaro Resources for Rs 660 crore. It is already in a pact to sell its stake in PT Arutmin Indonesia, and is now in talks to sell its stake in its asset in Zambia, BSSR coal mine in Indonesia and its shipping business.
“Even in this challenging environment, we received the money for our deal in South Africa. We are in the final stages of signing the deal for the sale of our shipping company and hopefully we will get the payment by June end,” Sinha said.
Over a decade ago, Tata Power invested in coal mines and shipping facilities to ensure backward integration and also diversified its global presence by investing in power assets overseas. But changes in the macro-economic environment and rising debt made the company change its strategy. The company has reduced its debt-to-equity ratio from 2.19 to 1.99 in FY20 and aims to reduce it to below 1.5 in FY21.
“We will restructure our renewable energy business this year; we have not yet finalised the structure for it. But we will definitely look at de-consolidation, so that Rs 11,000 crore of debt on renewable assets moves out of the company’s balance sheet,” Sinha said.
The lockdown due the pandemic has delayed the signing of agreements for revised tariff for its loss-making Mundra unit. Sinha said that two of the key power procurers from the project– Gujarat and Maharashtra – have agreed and the other discoms are likely to get on board once the discussions resume. He also said that the government’s decision to inject Rs 90,000 crore liquidity into discoms has come as a big relief for the cash-strapped sector.
“Liquidity was a challenge in the sector. The industrial and commercial consumers consume about 30-35% of our volumes but their revenue accounts for 55-60% of total revenue, so their inability to pay is impacting the discoms and restricting their ability to pay generation and transmission companies. The move to inject Rs 90,000 crore into state discoms is a welcome step as it will pump in money directly into the system,” Sinha said.
Separately, Tata Power took over the management of Central Electricity Supply Utility of Odisha (CESU) management on Monday, after it emerged as the winner for bids for license to supply electricity to five circles in the coastal state.
Source: Economic Times