ETA Star India Projects Pvt. Ltd, the Indian subsidiary of Dubai’s ETA Star group which has annual revenues of $4 billion (Rs16,200 crore), is planning an initial public offering to fund new power projects in the country.
“We are debating the IPO timing. The proceeds of the IPO will go towards creating a 10,000MW capacity in India and (working on) our coal trading plans in India. We are scouting for locations for setting up power projects in Tamil Nadu, Andhra Pradesh, Kerala and Karnataka. These will be port-based projects,” ETA Star director Hameed Syed Salahuddin said.
He declined to elaborate on a time frame. The company has firmed up plans to set up a 1,200MW power project based on imported coal at an investment of Rs6,000 crore in Tamil Nadu. According to analyst estimates, an investment of around Rs40,000 crore is needed for 10,000MW of power generation capacity.
“You need to have growth capital to set up this kind of capacity and any developer will have to approach the capital market at some point of time. Power sector is an extremely attractive sector as compared to others even with the present volatility in the markets,” said Shubhranshu Patnaik, an executive director at consultant PricewaterhouseCoopers.
In another development, the ETA Star group has acquired a coal mine in Mozambique having a reserve of 100 million tonnes and will mine it through a joint venture with the Mozambique government. “The coal from this block will be used for ourpower projects in India and for our coal trading business,” Salahuddin said.
ETA will have to compete, among others, with Coal and Oil Group Llc. Dubai, PTC India Ltd and MMTC Ltd in the coal trading business.
The size of the market for imported coal that goes into power generation in India is around 20 million tonnes per annum (mtpa). Coal imports are projected to more than double to 40mtpa by 2012 due to an increase in demand from power projects and the company has been aggressively pursuing coal mining rights internationally.
ETA Star India’s Star Emmsons Resource unit recently acquired Indonesia’s Bara Energy Makmur (BEM), a company with two coal blocks, as reported by Mint on 30 January. ETA Star also plans to acquire two more coal mines in the island nation at an investment of $500 million.
ETA Star India Projects recorded a turnover of Rs1,600 crore in 2006-07 and is expecting to close the current financial year (2007-08) with a turnover of Rs2,000 crore.