PXIL gets Dec deadline to hike net worth

Central electricity regulator asks power exchange to achieve Rs 25 cr by March 2014; will not grant extension

The Central Electricity Regulatory Commission (CERC), in its order released on Thursday, has rejected Power Exchange India Ltd (PXIL)’s demand to give extension up to March 31, 2015, to achieve a net worth of Rs 25 crore, as mandated under the Power Market Regulations, 2010.

Instead, the regulator has stuck to its earlier directive of PXIL increasing its net worth to Rs 25 crore by March 31, 2014.

CERC has also asked PXIL to infuse capital and increase its net worth to Rs 10 crore by December end and submit a confirmation.

The power regulator has clarified no further extension would be granted.

PXIL, in its petition, had sought extension up to March 31, 2014, to increase its net worth to Rs 10 crore and till March 31, 2015, to achieve a net worth of Rs 25 crore.

In its order on June 8, CERC had asked PXIL to take steps to infuse capital and increase its net worth to at least010 crore within one month of the issue of the order and submit a confirmation for the same in the form of a CA certificate.

M G Raoot, managing director and chief executive officer, PXIL, told Business Standard, “To be granted a time extension by the CERC is a welcome step. According to our business strategy, we are confident of improving our market share in the days ahead through a slew of initiatives which we have already undertaken.”

PXIL had a paid-capital of Rs 5 crore on the date of notification of the power market regulations on January 20, 2010. CERC had allowed time till January 21, 2011, to achieve the net worth of025 crore through its order of  May 25, 2010. The time was, however, further extended till March 31 this year.

PXIL had informed the regulator the National Stock Exchange and National Commodity and Derivatives Exchange have contributed to equity infusion from time to time which had helped it to achieve a share capital of056.1 crore as on March 31. This included preference share capital of010 crore which was not considered by CERC in computation of net worth. Of the044 crore infused later, major percentage of capital has been infused by the promoters.

PXIL, however, submitted that due to the restriction in share holding percentage, the promoters had to infuse capital in the form of preferential capital, which according to the power market regulations was not considered for calculating net worth. The power exchange said it was in dialogue with several private equity, international power exchange and state utilities to increase equity.

According to PXIL, it has rationalised its cost structure over the past two quarters, which has helped reduce the cash loss. Further, the power exchange informed the regulator it was considering an innovative contract pricing structure for its weekly contract which is more suited to the market needs.