November 22, 2008

DVC may set up a subsidiary to float IPO

DNA reported that Damodar Valley Corporation has been advised by its consultants KPMG to set up a subsidiary which can float an initial public offer.

Mr Asim K Barman chairman of DVC said that a follow up study by KPMG is being undertaken to decide whether the existing power plants can be kept under the old DVC formation and the new Greenfield projects should be transferred to the new arm, or whether DVC itself can generate funds the way it has been doing for its 11th Plan projects.

However, he said that the IPO is needed for the new projects to be set up under the 12th Plan since these will be super critical units and require a new type of technical efficiency. He added that DVC may induct a strategic international partner through an expression of interest, a proposal that is being weighed at present.

In the 12th Plan, DVC has identified five projects of 1,320 MW each which are slated to be executed either by DVC or its arm, which may not be a 100% subsidiary. In the 11th Plan, 6,000 MW will be added for which line of credit has already been tied up with REC, PFC and commercial banks. About INR 20,000 crore will be financed through debt and INR 8,000 crore from internal accruals.