DVC board approves subsidiary to tap capital market

Kolkata: The board of directors of Damodar Valley Corporation has approved the KPMG proposal to tap capital market through a subsidiary power generation company.

The DVC board, had further assigned KPMG to decide on the assets to be managed by the proposed subsidiary. Possibilities of roping in a technology partner in the proposed subsidiary were also considered.

The corporation is hopeful to complete the entire process of incorporating the subsidiary with a definite business plan and approach the Union Government with a firm IPO plan in the next three months.

According to the Chairman, Mr Asim Burman, the preliminary discussions suggest that DVC may continue to implement all the thermal power projects lined up to enhance the capacity from a little over 3000 MW to 8000 MW through five projects during the Eleventh Plan period (2007-12). DVC has already announced financial closure of almost all the projects.

“However, the projects now being identified for implementation during the Plan-XII may be brought under the subsidiary,” Mr Burman said addressing a press conference here today, adding that a firm view in this regard would be taken following submission of KPMG recommendation.

Incidentally, the corporation has also taken an in principle decision that all the future coal-based thermal projects to be taken up either by DVC or its proposed subsidiary would be of “super critical” (over 500 MW per unit) nature, to reduce the environmental impact.

The corporation has so far identified five such super critical thermal power projects – each having two units of 660 MW – at Ragunathpur (phase-II), Kodarma, Ramgarh and Panchet and Maithon Left bank for implementation during the Twelfth Plan period. Of the five, Raghunathpur is in Purulia district of West Bengal and the rest are in Jharkhand.

Meanwhile, the corporation has reported nine per cent drop in its net profit to Rs 1,126 crore during 2007-08. This was against 7 per cent increase in turnover to Rs 4,953 crore.

According to Mr Burman, the net profit was down due to provisioning of Rs 637 crore towards arrears in the pension fund. DVC has also assigned SBI Life to manage the Rs 1,747-crore pension fund of the organisation.