GVK Power & Infrastructure Ltd (GVKPIL), the Hyderabad-based infrastructure firm, plans to foray into power distribution in Punjab and Bihar among other states, and also start trading in power in its first attempt to enter the power distribution and trading businesses.
“We are already into merchant power business in a limited way. We are now evaluating the proposal to enter into power distribution as well as power trading business,” said G.V. Krishna Reddy, chairman, GVKPIL.
The company is waiting for the unbundling of the state electricity boards (SEBs) of various states into separate generation and distribution entities and will then bid for these. “We are keenly looking at power sector reforms being initiated by states such as Punjab and Bihar,” added Reddy.
Nitin A. Khandkar, senior vice-president (research) at Mumbai-based Keynote Capitals Ltd, said that while the diversification into power distribution was logical, the business was capital-intensive and asset-heavy. “A foray into power trading, however, makes eminent sense, it being an asset-light activity and also an extension of the company’s core activity of power generation.”
Explaining the rationale behind entering the new businesses, Reddy said, “We are already present in the power-generation business. It allows me to sell power to anyone and also helps my power trading business.” The company is already present in the power-generation sector with its 216MW Jegurupadu-I project and is currently implementing several power-generation projects that are at various stages of implementation. These ongoing projects include the 220MW Jegurupadu-II, 464MW Gautami Power, 330MW Alaknanda Hydro Power, 600MW Govindwal Sahib and 370MW Gauriganga project.
The company, which has interests in airports, power, roads and services, recorded revenue of Rs1,200 crore and net profit of Rs250 crore in 2006-07. It hopes to record revenue of Rs2,000 crore and double its profit to Rs500 crore in 2007-08.
On 8 June, the GVKPIL stock lost 6.43% to close at Rs405.20 on the Bombay Stock Exchange on a day when the exchange’s 30-stock benchmark index, Sensex, lost 122.37 points to close at 14,063.81.