Bajaj Hindusthan to sell stakes in 2 power arms

Bajaj Hindusthan Limited (BHL), India’s largest sugar producer, has put its entire holding in group companies Bajaj Energy and Bajaj Hindusthan (Singapore) Pte Ltd (BHSPL) on the block. The move is aimed at consolidating its power business and avoiding cross-holding.

While Bajaj Energy (in which BHL holds 26 per cent stake) was set up through a special purpose vehicle early last year, BHL’s Singapore-based wholly-owned subsidiary BHSPL was set up to acquire coal mines outside India to feed its power plants here.

Confirming the development, a senior official said, “This is a part of Bajaj Hindusthan’s restructuring plan — the sugar business would be separated from the power business. We are in talks with a number existing shareholders of BHL and other group companies to sell stakes in these two entities.”

While Bajaj Energy’s 450-Mw merchant power generation business is operational, another 1,980 Mw of additional capacity would commence commercial operations in two and a half years. According to the BHL’s annual report, Bajaj Energy recorded revenue of Rs 20.14 crore from the sale of power for the year ended March 31, 2012. It sells power generated from its projects to Uttar Pradesh Power Corporation at a provisional price of Rs 4 per unit.

Without divulging the enterprise value and details of group companies with whom talks were in advanced stages, the official said, “The Singapore subsidiary of BHL was set up to acquire coal mines abroad and the entity had already acquired one mine in Indonesia. Therefore, there is no point in selling the raw material business to outside the group company and remaining dependent upon them for coal supply, as and when required. Therefore, we are considering selling stake in both subsidiaries to group companies or our existing shareholders in any one of them.”
 

BHSPL is engaged in trading in commodities and also exploring opportunities for another coal mine acquisition in Indonesia. The Company achieved a turnover including other income of US$ 12.79 million and posted a net loss after taxation of $ 0.13 million for the year ended March 31, 2012.
 

In a note to the Bombay Stock Exchange (BSE), the company said that its board of directors has approved re-appointment and payment of remuneration to Shishir Bajaj, CMD for a further period of five years w.e.f July 01, 2013 and payment of minimum remuneration in case of loss or inadequacy of profit for a period of three years.
 

Facing the sugar industry’s poor performance due to lower realization than cost of production, the top management executives foregone commissions which they are legally entitled to. Now, with the board’s approval, they would be able to use it, the official said.