CESC Ltd has approved the raising of up to Rs.200 crore by way of private placement of non-convertible debentures, the Kolkata-based power utility said in a stock exchange filing.
The proposal was approved by a committee of the board of directors that met on December 23, 2020.
CESC, in a stock exchange filing, said that the company would be mopping up Rs.25 crore with an option to retain over-subscription to the extent of Rs.175 crore.
Proceeds of the issue will be used for fresh capital expenditure, long-term working capital, reimbursement of capital expenditure incurred, refinance of loan and/or working capital borrowing, the company said.
The non-convertible debentures, with a face value of Rs.10 lakh per NCD will be allotted on December 28, 2020 (deemed allotment date) and will be redeemed on December 7, 2023.
The coupon rate will be benchmarked to the 12-month treasury bill rate, and will have a spread of 240 basis points.
Updated on December 24, 2020: In a subsequent development, CESC announced that it has allotted the aforementioned NCDs aggregating Rs.200 crore, on private placement basis, to Citibank N.A.
Distribution franchisee business
It may be recalled that CESC managed to restrict aggregate financial losses in its three distribution franchisee circles of Rajasthan during the first half (April to September) of FY21. However, revenues from Rajasthan were also lower, year-on-year, during the period.
In its latest investor presentation, CESC reported a loss of Rs.32 crore in H1 of FY21 from its three distribution franchisee (DF) circles – Kota, Bharatpur and Bikaner – in Rajasthan. This performance was better than in H1 of FY20 when such losses stood at Rs.56 crore. However, revenues also dropped 3.4 per cent to Rs.840 crore in H1 of FY21 from Rs.897 crore in H1 of FY20.
The DF mandate for the Kota circle was handed over on September 1, 2016 and will be valid for twenty years. This is the biggest of CESC’s three circles in Rajasthan with an area of 176 sqkm and a consumer base of 2.59 lakh. Currently, the T&D loss in this circle is hovering around 20.4 per cent. The Bikaner circle (area: 155 sqkm, consumers: 1.78 lakh) has a T&D loss of 14.4 per cent. The smallest of the three is the Kota circle covering an area of 50 sqkm and 70,000 consumers. The losses of Kota are the lowest at 12.3 per cent.
CESC also recently acquired distribution franchisee rights on the Malegaon circle in Maharashtra. For Malegaon, CESC has outlined minimum capital expenditure of Rs.20 crore per year for the first five years of the DF concession period. In the remaining fifteen years (sixth to twentieth), the capex would be in the region of Rs.3 crore per year.
Featured photograph shows a coal-based power generation plant of CESC
