Tata Power eyes shipping, logistics

Mumbai: Tata Power, one of the largest private sector power producers in the country, is planning to enter the shipping and logistics business to facilitate coal shipment for its power plants.

The company is planning to raise funds up to Rs 4,000 crore from domestic and international market through equity shares and other instruments.

The company has sought shareholders’ approval for raising funds and foray into new businesses through a postal ballot. The company is in an aggressive expansion phase and in the next five years plans to add 10,000 MW capacity based on thermal coal.

The Mundra ultra mega power project will add 4,000 MW, power plants in Maharashtra will add 3,000 MW, captive power generation for Tata Steel will add 2,000 MW and 1,000 MW from Maithon Power Plant at Jharkhand.

Talking to Business Line, Mr Rajeev Kashikar, shipping expert and partner with Foster Capital, a private equity fund, said that Tata Power’s venture into shipping and logistic business is in line with its growth plans.

The new businesses will help the company to control the coal supply chain.

“They could offer surplus coal to other power producers also,” he said.

Tata Power’s coal requirement will be increased from 2 MTPA currently to 20 MTPA by 2014.

It had signed definitive agreements in March 2007, to purchase 30 per cent equity in coal companies owned by PT Bumi Resources of Indonesia for $1.1 billion

As a part of the purchase, Tata Power has signed an offtake agreement with the company, which entitles it to purchase about 10.1 million tonnes of coal per annum for an initial period up to 2021, which is extendable thereafter.