GVK sets sight on empire building

Hyderabad-based GVK Group, which hogged headlines by emerging as the successful bidder for the Mumbai Airport modernisation project, intends to build its empire of diverse corporate interests with power sector as the foundation.

Addressing a media conference in connection with the public issue to fund the new holding company, GVK Power & Infrastructure Limited (GVKPIL), here on Friday, G V Krishna Reddy, CMD of the company, and his son G V Sanjay Reddy, who is the director, said the company's strategy would be to utilise the immense opportunities both in infrastructure and power sectors in the country.

"The company proposes to enter several new infrastructure areas like SEZs, metro rail project, and power trading and distribution."

The company also plans to build a couple of hydel projects in Uttaranchal and a thermal power project in Punjab at an estimated cost of Rs 4,000 crore in addition to the 446-mw gas-based power project, Gouthami Power Limited.

While the duel-fuel combined cycle Gouthami Power project will go on stream in September, 2006, the company's 220-mw GVK extension plant is expected to commence commercial operations from the middle of this month, according to Sanjay Reddy.

The public issue will constitute 35 per cent of the fully diluted post-issue paid-up capital of the company, GVKPIL. The company will utilise the funds raised through the issue to contribute to part of the equity capital of Rs 435 crore of GPL.

The equity infusion from the proceeds of the public issue is Rs 95.3 crore and another Rs 60 crore will be spent for the repayment of bridge finance taken from IL&FS by the company for funding equity of GPL, according to promoters. The total cost of the project is over Rs 1,400 crore.

The company, which currently holds 47.47 per cent stake in GPL now plans to increase its equity to 51 per cent. The issue entered the capital market on February 2, 2006, with an IPO of 8.2 million equity shares of Rs 10 each through 100 per cent book building process.

The price band has been fixed at Rs 260 to Rs 310 per equity share of Rs 10 each. The issue closes on Feb 7, 2006.