Jindal Poly may seek PE investment for subsidiary

Jindal Poly Films (JPFL) plans to go for private equity investment in its subsidiary Jindal India Thermal Power. The BC Jindal-group promoted company may also go in for listing Jindal India Thermal once the company’s Rs 9,121-crore power plant in Orissa becomes operational.

Jindal India Thermal’s 1800 Mw plant will have three units of which the first will be commissioned in March 2012, the second in September 2012 and the third in September 2013. “Before the project goes on on-stream, we will go in for PE investment or a public issue to unlock the value for JPFL. We are looking at 10-15 per cent dilution in the company,” Sanjeev Aggarwal, Chief Financial Officer, Jindal India Thermal, said.

Jindal India Thermal has signed a second power purchase agreement with Tata Power Trading Company for sale of 400 Mw power from the plant on merchant basis for 12 years. With the signing of PPA, the company will sell a total of 900 Mw to Tata Power for which it has been guaranteed a minimum tariff of Rs 2.70 a unit besides getting a 10 per cent share in the upside.

It has also signed PPA with the Orissa government-owned utility Gridco for supply of another 250 Mw from the power plant in Angul district of Orissa. “The company will sell the remaining 650 Mw itself on merchant basis. Through our PPA with Tata Power, we are assured that the 900 Mw we sell on merchant basis through them will fetch us a minimum return of Rs 2.70,” said Aggarwal.

JPFL holds 64 per cent equity in the company through its holding company Jindal India Powertech Ltd. The project, being developed on a debt equity ratio of 80:20, recently achieved financial closure after tying up the last tranche of Rs 1,800-crore debt with a consortium of banks led by Punjab National Bank. While JPFL is investing Rs 153 crore in subsidiaries and affiliates this year, it is investing additional Rs 456 crore in the pit-head power project. It has already invested Rs 108 crore with the remaining investment likely to be made over the next two years.

The project would run partly on captive coal mine and partly on linkage coal. The company is developing its captive mine in Orissa through Mandakani Coal Company, a joint venture with Tata Power and Monnet Ispat.