CESC may announce separation of retail business today

Analysts expect power utility CESC to be carved up into multiple entities


For years, the group has been weighing the separation of its retail business Spencer's from CESC. Photo: Indranil Bhoumik/Mint.
For years, the group has been weighing the separation of its retail business Spencer's from CESC. Photo: Indranil Bhoumik/Mint.

Kolkata: The RP-Sanjiv Goenka Group is expected to announce on Thursday a much-anticipated restructuring of flagship company CESC Ltd. Analysts expect the power utility to be carved up into multiple entities.

For years, the group has been weighing the separation of its retail business Spencer's from CESC. Also, it is expected that CESC will separate its power generation and distribution businesses into separate companies. On 10 May, Mint had reported about the expected restructuring.

CESC’s shares were trading at Rs976.00 each on BSE at 12.40 am on Thursday, down 0.14% from its previous close, in a weak market while the market benchmark Sensex was trading down 0.38% at 30,541.83 points.

The separation of Spencer’s will eventually lead to capital-raising to pay down its debts, Anuj Upadhyay, an analyst at broking firm Emkay Global Financial Services Ltd had said last week.

According to his estimates, Spencer’s has a debt of around Rs400 crore.

Analysts from at least four broking firms had said in research reports that Spencer’s had for the first time broken even at the store level, generating enough cash for its operating costs.

This, according to some analysts, was achieved ahead of expectations. According to Motilal Oswal Securities Ltd, the current financial year could turn out to be the first full year of profit after operating costs.

Alongside, it is also expected that CESC will separate the generation and distribution divisions of its power business for better management and transparency.

Group chairman Sanjiv Goenka has said several times that going forward, CESC will be focusing on expanding its distribution business. The group has lately secured through bidding the right to distribute power in cities such as Kota and Bharatpur in Rajasthan.

More From Livemint