September 08, 2008

DVC to float subsidiary for IPO

It is reported that Damodar Valley Corporation has decided to float a fully owned subsidiary to tap the capital market. The expansion, which will make DVC India’s second largest power utility after NTPC, is currently being funded with loans and internal accruals.

Mr Jairam Ramesh union minister of state for power & commerce said that the government is not thinking of amending the DVC Act since it was not created by Parliament. He added that "It is an Act made by the Constituent Assembly, 4 years before Parliament came into being."

The DVC subsidiary would enter the capital market with an initial public offer. KPMG is looking into the options of whether the subsidiary would be an umbrella company taking over a number of existing projects or whether the subsidiary would float special purpose vehicles for each project.

DVC will play an important role in the 2010 Commonwealth Games in Delhi, supplying at least 2,200 MW to the power starved northern zone. The 7600 MW that DVC proposes to add over the next 4 years would require an investment of INR 38,000 to INR 40,000 crore.