Thursday, March 18, 2010

Increasing Opportunities : Birla Power to invest Rs 5,000 cr in thermal & solar power projects

Birla Power Solutions will invest nearly Rs 5,000 crore to set up thermal and solar power projects in the next three years, according to chairman Yash Birla. Mr Birla on Wednesday said his group has floated a special purpose vehicle (SPV) — Birla Urja — to run the power business. Birla Power holds a 51% stake in the SPV, while the balance is with group companies.

According to him, his group will set up 600 mw of thermal power plant capacity in Maharashtra and 125 mw solar power capacity in Andhra Pradesh, Rajasthan, Uttaranchal and Haryana. The investments in the power projects will have a debt-equity ratio of 70:30. “The equity component will be funded through various options, including contribution from the promoters and private equity funds, while debt will come from institutions like State Bank of India and Power Finance corporation,” Mr Birla said.

However, analysts are unclear on how the group will fund such large projects. A power analyst said Mr Birla needs to chip in least Rs 1,500 crore to finance the projects. The present market capitalisation of Birla Solutions is Rs 160 crore. The stock gained 10% to close at Rs 3.91. Birla Cotsyn, another company of his group, is valued at Rs 120 crore.

“Half of the power generated from the plants will be sold to state distribution companies, while the balance will be for the captive use of group facilities,” said Mr Birla. Meanwhile, Birla Power on Wednesday informed BSE that its board would meet on March 25 to discuss the fund-raising options

Source: The Economic times

Srikanth Nyshadham

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