Panel Puts Total Kptcl Assets At Rs 5,700 Cr
An internal committee of the Karnataka Power Transmission Corporation Ltd (KPTCL), the state electricity board, has placed the total assets of the board at Rs 5,700 crore.
The exercise was carried out as part of the reforms process which is underway in the KPTCL. KPTCL is expected to be split into transmission and distribution companies shortly. A consultant will be appointed to chalk out a road map for unbundling the corporation. The total assets worth around Rs 5,700 crore does not include provisional adjustments worth around Rs 609 crore.
The group also carried out complete restructuring of the balance sheet which also required providing a proper liquidity base to the new entities to make them financially and commercially viable and to achieve the required ratio over a period of five years.
The process of cleaning up the balance sheet consisted of write offs, write backs and waiver of receivables, adjustments of cross-debts, assessment of cash support from the government of Karnataka, fresh borrowings from the market, divestment option and employees stock option scheme.
The group suggested the following measures as part of the restructuring plan:
l Release of additional equity by the government in cash.
l Foregoing of loans and interest payment by the government
l Retention of contingent liabilities by the state government.
l Discharging a portion of the current liability (power purchase partly in cash and partly through adjustments).
l Liquidating power purchase dues through issue of trade bonds backed by the state government guarantee.
l Mobilising a portion of the resources for creation of pension trust by disinvesting of existing generation assets.
l Introducing employees stock option scheme.
l Further securitisation of receivables and
l Utilisation of balances under reserves, surplus, consumers contribution and others for cleaning up the balance sheet.
The total balance under current liabilities as on March 31, 1999 was around Rs 2,220 crore of which interest on Karnataka Power Corporation Ltd (KPCL) power purchase dues alone constituted around Rs 190 crore. The group has also proposed conversion of current liability into long term liability through issue of trade bonds. The total outstanding power purchase dues from power generating companies works out to around Rs 640 crore of which dues from KPCL is around Rs 310 crore, from Nevyali Lignite Corporation around Rs 201 crore, from NTPC around Rs 100 crore and others around Rs 30 crore.
The current equity of the corporation stands at Rs 436.01 crore and an additional equity of Rs 28 crore is proposed which would raise the aggregate equity of successor entities to around Rs 650 crore. The authorised capital of KPTCL is around Rs 1,000 crore.
The group notes that with reforms, improved efficiency and rationalisation of tariff rates and the financial restructuring, the new entities would be able to turn around in another five years and may not need support from the state government to meet their financial objectives of achieving a rate of return of 16 per cent on equity, besides mobilising 20 per cent of internal resources and a debt/equity ratio of 2:1 with a debt service coverage ratio of 1:3.
The exercise
* KPTCL may split into transmission and distribution companies soon
* A consultant willbe appointed to chalk out the process for unbunding the corporation
* The total assets of Rs 5,700 crore do not include provisional adjustments worth Rs 609 crore
* The group carried out complete restructuring of the balance sheet which also required providing a proper liquidity base to the new entities to make them viable
* The process of cleaning up the balance sheet consisted of write offs, write back and waiver of receivables, adjustments of cross debts, asessment of cash support from the government of Karnataka, fresh borrowings from the market, divestment option and employees stock option scheme.