October 14, 2008

PGCIL clarifies on news regarding JV with Zee Network

Power Grid Corporation of India Limited has clarified with reference to news item appearing in leading financial daily titled "Power Grid plans foray into entertainment business" that it is not in talks with Zee Network Limited for a JV to foray into entertainment business and the news appeared in the daily has not been published by the company.

It was reported that Power Grid Corporation of India Limited is planning a foray into the entertainment space and is in talks with Zee Network Limited for a possible JV and that aims to leverage its extensive fiber optic telecom network to stream entertainment content in order to secure higher returns on investments, more than the regulated returns of 14% that it gets from its core business of power transmission.

The report had quoted a source as saying that “The move by PGCIL to rent out its fiber optic infrastructure is in line with its plans to diversify into areas with high returns and low incremental costs. While the power transmission business generates stable return on equity of 14%, the entertainment business has the potential to rake in higher returns through minimal investments on infrastructure.”

PGCIL owns and operates the bulk of India’s inter state power transmission assets and transmits about 45% of the power generated in the country. It has also developed a 19,000 kilometer long fiber optic telecom network and plans to expand its telecom and consultancy business.