Tata Power to sell some overseas assets, may raise up to Rs 2.5K crore

Tata Power is planning to raise up to Rs 2,500 crore by selling some of its assets overseas, including hydro assets in Zambia, and two coal mines in Indonesia.

The firm would also receive an additional Rs 1,200 crore from the sale of the strategic engineering division’s assets in the next two years, according to banking sources. The proceeds of the sale will be used to invest in the company's ambitious renewable energy projects which is looking to produce 20 gigawatt (Gw) of electricity by 2027.

According to sources, the company is in talks to sell its stake in its joint venture Baramulti Suksessarana coal mine in Indonesia this current year. In the last financial year, it signed an agreement to sell its 30 per cent stake in PT Arutmin Indonesia and associated companies in coal trading and infrastructure for $401 million.

Of this, the company received $369 million till March this year and expects to receive the rest in the ongoing financial year.

A spokesperson of the company did not comment on the asset sale.

The proceeds of the sale will be used by the company to invest Rs 12,000 crore in its upcoming 4 Gw manufacturing plant, under-construction renewable projects, and transmission and distribution businesses in Odisha, Delhi and Mumbai in the ongoing financial year.

The 4 Gw cell and module manufacturing plant in Tamil Nadu is on track, and the module line will be ready by October this year and the cell line by year end, Tata group chairman N Natarajan informed the shareholders at the annual general meeting on June 19.

The company has identified renewable energy for investment worth Rs 75,000 crore in the next four years. It has housed the renewable business, including utility scale projects, rooftop installations, solar EPC and manufacturing, solar pumps and electric vehicle charging, under its subsidiary Tata Power Renewables Energy (TPREL).

Top global funds like BlackRock Real Assets and Mubadala Investment Company have invested Rs 4,000 crore in TPREL last year. The two investment firms will hold 6 per cent stake in TPREL, and will hold 9.76 per cent to 11.43 per cent in TPREL on conversion of the bonds into equity, subject to the equity valuation on the final conversion.

The investment would aid in scaling up the renewable business at a faster pace and has become the growth engine for Tata Power. The company has increased its target of renewable portfolio to 20 Gw by 2027 compared to 5.2 Gw currently.