R-Power to spend Rs 3,000 cr for mines to fuel Sasan project

Awaits government nod for plan to develop mines in a strategic partnership with North American Coal Corporation.

Reliance Power Limited, the flagship company of the Reliance Anil Dhirubhai Ambani Group(ADAG), plans to invest about Rs 2,500-3,000 crore over a period of three years, to develop three coal mines to fuel its Sasan Ultra Mega Power Project in Madhya Pradesh.

“We have submitted the plan for the pit-head mines, to be developed in a strategic partnership with the North American Coal Corporation (NACC), to the ministry of coal and expect the final clearance within a few months,” a top Reliance Power, official told Business Standard.

NACC, the largest lignite coal producer and among the top ten coal producers in the US, will provide technical assistance, including evaluation of geological data, mine planning and design, supervision of mining operations and training for Reliance professionals, according to the memorandum of understanding (MoU) signed with Reliance Power.

Biggest ever
Sources said the coal mining plans of Reliance Power for the Sasan project would be one of the largest and unprecedented in India, with advanced coal handling equipment.

One of the transportation vehicles (of 240 tonne capacity) that will be used is equivalent to the size of four railway wagons.

The company has placed orders for modern coal handling equipment with four to five leading manufacturers in the US and Europe, said the official.

Sasan Power Limited (SPL), a fully owned subsidiary of Reliance Power, has about 750 million tonnes of coal reserves at Moher (capacity of 402 mt), Chattrasal (150 mt) and Moher-Amlori Extension (198 mt), over an area of about 6,000 acres in and around the proposed power project.

Coal requirement
The Rs 18,300 crore Sasan project is scheduled to go on-stream with the first 660 mw unit of the 3,960 mw project to go on-line ahead of schedule within a few years. The ultra mega power project will require about 15 million tonnes of coal annually.

According to sources, Reliance Power was among the first to submit a coal development plan for captive coal blocks allocated in the past few years.

The Sasan project was awarded to Reliance Power in August 2007 and the coal development plan was developed and submitted within few months, said the official.

First of nine
In the case of some captive coal blocks allocated to power producers such as National Thermal Power Corporation, the development plan has not been submitted even after nearly five years, the sources said.

Sasan is the first of eight or nine such mega power projects planned in the country, and was scheduled to be fully commissioned by April 2016, with six 660 mw units planned.

However, Reliance Power is working to commission the project ahead of schedule by fast tracking the entire process, said the official.

Reliance Power currently has access to coal reserves of about one billion tonnes in India and abroad, including a coal mine in Indonesia, which it acquired recently.

In India, the company has access to another 150 million tonnes of coal, along with five others who were allocated mines in Orissa and Chattisgarh.

Reliance Power is setting up 13 projects with a total capacity of over 28,200 mw. Seven of them are coal fired projects. Coal will be imported for the Krishnapatanam and Shahanpur projects.

P B Jayakumar / Mumbai March 26, 2008

Source : http://www.business-standard.com/

Month's wait for R Power bonus to see light of day

MUMBAI: It's 23 days since chairman Anil Ambani declared a 3:5 bonus share issue in Reliance Power on Feb 24. The move aimed at compensating investors for the sharp fall in stock price two weeks after it listed.

“I have been personally concerned by the notional losses arising to millions of long term investors in Reliance Power, as a result of the adverse change in sentiment in global and domestic capital markets. We have taken this one-time measure, to protect and enhance value for all our long-term shareholders,” said Ambani.

Two days prior to the bonus announcement the stock had closed at Rs 416.85, down 7.36 per cent or Rs 33.15 from its issue price of Rs 450. A day after the declaration and first day of trade, Reliance Power shares rose 8 per cent.

Today the Reliance Power stock was at Rs 318.20 on NSE, up 0.84 per cent from Monday which saw the Sensex fall 950 points due to global turmoil.

The bonus issue would lower the cost per share to Rs 269 for individual investors 40 percent lower than the IPO price of Rs 430. The acquisition price would come down to Rs 281 for other investors, or 37 lower than the IPO price of Rs 450.

But investors looking for that succour will have to wait till April 21 when the results of the postal ballots seeking shareholders’ approval will be available. Then it will be a wait for the record date.

“Result of the postal ballot will be declared on Apr 21. After the results, we will intimate SEBI and will follow up the required regulations for bonus issue,” said Paresh Rathod, company secretary of Reliance Power, when contacted by ET Markets.

According to SEBI guidelines, a company must issue the bonus shares within six months from date of announcement.

Further, there are the eligibility criteria. Only shareholders holding shares on record date would be entitled to receive bonus shares. Original allottees from the IPO, but who have sold prior to record date, would not be eligible for the bonus shares.

This move is aimed at checking alleged detractors from a repeat situation of listing day on Feb 11, when the Reliance Power share ended 17 per cent lower.

On listing day, total 6.41 crore shares, or 28 per cent of the net offer to the public, were sold on the BSE and NSE combined.

Reliance Power had written to the Securities and Exchange Board of India seeking an investigation into the price fall, with Ambani accusing rivals for the share fall.

Around 11 crore shares have changed hands till date, according to NSE data. This makes for about 1/3 of total shares held by retail investors who will lose out on the bonus shares.

Reliance Power's IPO closed on Jan 18, receiving an overwhelming response, with commitments of nearly Rs 7,50,000 crore, from nearly 500 institutional investors and 5 million retail investors.

“In the current bearish scenario, if they (Reliance Power) fix the record date in April and the market remains volatile, there are chances the share price may go down significantly. The company is likely taking care about the timing for allotment,” said A Chauhan, fund manager at DMB Wealth Management.