Torrent merges power firms into single entity

In a bid to emerge as a leading player in the power sector, the Torrent group has merged three of its power companies into one and christened it as Torrent Power Limited.

These companies are Torrent Power AEC Limited (TPAL), a 93-year-old integrated power generation, transmission and distribution Company, Torrent Power SEC Limited (TPSL), a 85-year-old power distribution company and Torrent Power Generation Limited (TPGL).

TPGL, jointly promoted by TPAL, TPSL and Torrent Private Limited, is setting up the 1100 MW SUGEN combined cycle power plant near Surat.

Ashok Modi, executive director, Torrent Power AEC Limited, said the idea behind the merger was essentially to have better balancesheet for upcoming investments opportunities in the sector in the country."

Most companies and the states which offer opportunities in power sector normally look for big balancesheet and so the merger would give us that necessary background to compete at the national level," said Modi.

With the merger of three companies, the total turnover of the new company would touch Rs 2,400 crore. This merger would enable the group to leverage its existing material and human resources for enhancing the value of all its stakeholders.

The Boards of Directors of TPAL, TPSL and TPGL, at their respective meetings held on January 24, 2006, had appointed Committees of Directors to study and suggest a suitable business model for reorganization of the power businesses of the group.

The three committees recommended merger of the companies into a new entity. The recommendations were approved by the Boards of Directors of TPAL, TPSL and TPGL at their meeting held on March 22.

The Boards of Directors have approved the following exchange ratios for the purpose of the scheme of amalgamation.

Twenty-two fully paid up equity shares of Rs. 10 each in Torrent Power Limited for one fully paid up equity share of Rs10 each, held by each member of TPAL. For TPSL, 47 fully paid up equity shares of Rs 10 each in Torrent Power Limited for one fully paid up equity share of Rs10 each, held by each member of TPSL.

One fully paid up equity shares of Rs 10 each in Torrent Power Limited for one fully paid up equity share of Rs10 each, held by each member of TPGL.

The Boards of Directors also recommended the reorganization of the share capital of Torrent Power Limited, by way of reducing the face value of each fully paid up equity share of Rs10 each to one fully paid up equity share of Rs 2.50 each and simultaneously consolidating four equity shares of Rs.2.50 each into one equity share of Rs.10 each. Pursuant to this reorganization, shareholders' stake in Torrent Power Limited shall reduce proportionately.

As a result, the shareholders of TPAL, TPSL and TPGL would actually receive 5.5 shares, 11.75 shares and 0.25 shares of Torrent Power Limited respectively, for each share held by them in their respective companies.

The consolidated Torrent Power Limited would have a generation capacity of 1,630 MW, spread over three locations at Sabarmati & Vatva at Ahmedabad and Akhakhol at Surat, a consumer base of 18 lakh customers in the cities of Ahmedabad, Surat and Gandhinagar and would be employing in excess of 6700 people, in the first full year of its operations.