New Delhi: Mahindra and Mahindra Ltd (M&M) and BAE Systems Plc will invest $21.25 million (Rs98.6 crore) over three years in a joint venture (JV), with M&M owning 74%, to make defence vehicles, according to a statement issued in New Delhi. The JV will employ about 100 people in a manufacturing facility at Faridabad near New Delhi.
REC plans to finance firms developing coal mines
Mumbai: State-runRural Electrification Corp. Ltd(REC), which only finances power plants, has decided to lend to companies developing coal mines in India, chairman and managing director P. Uma Shankar said. The proposal has been okayed by the company’s board and REC will start financing companies that own domestic mines, Shankar said. REC lends 91% of its funds to state electricity boards and state-owned power firms such asNTPC Ltd. Another 7% is borrowed by private companies and the rest is given to joint-venture projects. The financier is also raising money through a follow-on public issue of 5% of government-held shares worth Rs4,181 crore.
“There are a lot of mines that have already been sanctioned,” Shankar said. “We will finance companies involved in the development of the mines, provided they own the mines. We haven’t got any proposals as yet.”
India hopes to generate another 78,577MW of power by March 2012, of which 60,000MW is expected to come from burning coal.
The country has 99 billion tonnes of known coal reserves and another 100 billion tonnes of inferred reserves, said Kuljeet Singh, head of transaction advisory at the consultancy firm Ernst and Young.
“The cost of developing a mine is not that high. Financing is not such a big problem. The problem that companies face is because of delays in environmental clearances and because of specifications related to the end use of coal,” Singh said.
Many Indian companies are scouting for mines abroad because of the delays in getting sanctions in India.
REC, which regularly borrows from the corporate bond market, had a loan book of Rs62,000 crore in December. Shankar didn’t say how much money it plans to keep aside for lending to miners. “Our cost of funds currently is 7.52%. We lend to government-owned companies at 10.75% and for lower-rated companies the rate can go up to 11.25%,” he said.
The executive added that the price of the follow-on offer will be decided by an empowered group of ministers on 17 February. “We plan to sell 17.17 crore shares. One-fourth of the proceeds will go to the government, while three-fourths will be used by us for lending,” he said.