Share prices of CESC, the power flagship of the Rs 17,000 crore RP Sanjiv Goenka Group, on Tuesday hit a new 52-week high, touching 735.60 in the wake of strong market rumours that the group might split its distribution and generation business into two separate companies. Market speculation suggested that the group would break up the two verticals and form two separate entities to unlock the value of the highly profitable distribution business.
Top CESC officials were tight-lipped and refused to comment on any “market speculation.” Significantly, group chairman Sanjiv Goenka had indicated in October last year that there was merit in keeping all generating units together while distribution businesses could come under a separate umbrella. In fact, CESC had also appointed PricewaterhouseCoopers (PwC) to conduct a feasibility study of such a possible hiving off exercise. The final report from PwC is yet to be received, a senior CESC official said on Tuesday. The group’s power business has companies like CESC, Dhariwal Infrastructure and Noida Power (Sanjiv Goenka’s family owns nearly 73 per cent stake in Noida Power and the balance stake is held by UP government-owned Greater Noida Industrial Development Authority).
Sources said that moves are afoot to merge the gene?ra?tion and distribution busi?ne?sses of these companies into two separate verticals. The power distribution and pow?er generation business both notched up Rs 500 crore in the financial year 2016.
Overall, the thermal power business contributed nearly Rs 9,456 crore to the group’s overall kitty in FY16, of which Rs 6,616 crore was accounted for by CESC.
Interestingly, top power department officials said the West Bengal Electricity Regulatory Commission had been mulling the idea of two different tariff structures for distribution and generation firms. A proposal to this effect has already been sent to the state government.
Earlier, arguing in favour of such a restructuring exercise, Goenka had said on October 27, 2016 (while announcing financial results of the group’s acquired IT arm Firstsource Solutions), “I personally don't see the logic of my distribution business in Rajathan or Noida or Kolkata under separate companies. I now need separate management and multiple CFOs or MDs for each of these businesses. There could be probably holding companies each for generation and distribution businesses.”
On another occasion, Goenka had also said that going forward, distribution would be an important vehicle and driver of growth for the company.
The group would be aggressively bidding for distribution rights in Raja?sthan and in other states. They had identified a few places that would throw up exciting and interesting opportunities for the com?pany, he had said.
The Kolkata-head?qua?r?tered power utility, which had won the distribution rig?hts for Kota and Bharatpur from Jaipur Vidyut Vitaran Nigam through a bidding process for a period of 20 years, is in the process of making a capital expe?ndi?ture of Rs 150 crore in the first year in power distr?ibution franchise of Kota and Bharatpur in Rajasthan, expecting a revenue of Rs 750 crore in the first year.
Top CESC officials were tight-lipped and refused to comment on any “market speculation.” Significantly, group chairman Sanjiv Goenka had indicated in October last year that there was merit in keeping all generating units together while distribution businesses could come under a separate umbrella. In fact, CESC had also appointed PricewaterhouseCoopers (PwC) to conduct a feasibility study of such a possible hiving off exercise. The final report from PwC is yet to be received, a senior CESC official said on Tuesday. The group’s power business has companies like CESC, Dhariwal Infrastructure and Noida Power (Sanjiv Goenka’s family owns nearly 73 per cent stake in Noida Power and the balance stake is held by UP government-owned Greater Noida Industrial Development Authority).
Sources said that moves are afoot to merge the gene?ra?tion and distribution busi?ne?sses of these companies into two separate verticals. The power distribution and pow?er generation business both notched up Rs 500 crore in the financial year 2016.
Overall, the thermal power business contributed nearly Rs 9,456 crore to the group’s overall kitty in FY16, of which Rs 6,616 crore was accounted for by CESC.
Interestingly, top power department officials said the West Bengal Electricity Regulatory Commission had been mulling the idea of two different tariff structures for distribution and generation firms. A proposal to this effect has already been sent to the state government.
Earlier, arguing in favour of such a restructuring exercise, Goenka had said on October 27, 2016 (while announcing financial results of the group’s acquired IT arm Firstsource Solutions), “I personally don't see the logic of my distribution business in Rajathan or Noida or Kolkata under separate companies. I now need separate management and multiple CFOs or MDs for each of these businesses. There could be probably holding companies each for generation and distribution businesses.”
On another occasion, Goenka had also said that going forward, distribution would be an important vehicle and driver of growth for the company.
The group would be aggressively bidding for distribution rights in Raja?sthan and in other states. They had identified a few places that would throw up exciting and interesting opportunities for the com?pany, he had said.
The Kolkata-head?qua?r?tered power utility, which had won the distribution rig?hts for Kota and Bharatpur from Jaipur Vidyut Vitaran Nigam through a bidding process for a period of 20 years, is in the process of making a capital expe?ndi?ture of Rs 150 crore in the first year in power distr?ibution franchise of Kota and Bharatpur in Rajasthan, expecting a revenue of Rs 750 crore in the first year.
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