Mumbai: Tata Power Ltd is trying to sell non-core assets to reduce debt, chairman N. Chandrasekaran said, even as it struggles to find a solution to its vexed Mundra power plant.

“The company is examining various debt reduction options including sale of non-core assets," Chandrasekaran said at Tata Power’s 98th annual general meeting (AGM) in Mumbai. He said Tata Power is in the process of identifying those assets for sale. The company now has a gross debt of Rs48,816 crore.

Chandrasekaran also said the Tata group company has earmarked around Rs3,000 crore as capital expenditure for the next one year, to be financed by internal accruals.

The other headache is Coastal Gujarat Power Ltd (CGPL), the Tata Power unit that runs a 4,000 megawatts (MW) ultra-mega power project at Mundra in Gujarat. The plant became unviable after Indonesia, from where coal is imported, sharply raised prices in 2010. After failing to convince its customers to pay more, CGPL applied to the electricity regulator to let it charge higher tariffs.

The appellate electricity tribunal allowed compensatory tariffs to make up for the higher costs, but this was struck down by the Supreme Court in April this year. Following this, the company offered to sell 51% stake in CGPL for a token Rs1.

“On the issue of resolution of the compensatory tariff for CGPL, the company approached all courts of appeal and continues to explore viable options to address the issues by continuous engagement with the power procurers and financial institutions," he said. CGPL has a project outlay of Rs17,900 crore for the Mundra project. It has accumulated losses of Rs6,457 crore on a paid-up equity capital of Rs6,083 crore. The company has invested around $1.2 billion on the Mundra plant, he said.

“We still don’t know how we can solve the Mundra issue...We currently have an under-recovery somewhere between Rs900 crore to Rs1,000 crore. Nevertheless, we would like to solve this issue and the only solutions are either we get some kind of resolution with the procurers and regulators or we find cheaper coal," he said.

Chandrasekaran also said Tata Power has more than 90 subsidiaries and associate firms and “the company is working on a plan to simplify the corporate structure where feasible." However, he did not provide details.

Anil Sardana, chief executive officer and managing director, Tata Power, said the company is gradually scrapping its 60-year-old flagship Trombay Power Station in Mumbai.

“We have been gradually moving out the units. Four units have been scrapped. This year, we are planning to scrap another 500 MW unit, which is the sixth one, which used to incidentally work on oil. And oil and gas are at a price which doesn’t make much meaning," he said.