MPS group may plan IPO to fund power foray

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As far as sourcing of machineries for the plant, he said while machinery from China could be obtained 'quick and cheap', there were domestic suppliers such as BHEL, Thermax, Triveni, Alstom etc but no final decision has been taken on this score. The company planned to import coal from Indonesia or Australia or the Philippines depending on the price quoted, grade and quality of the coal. It would be a single unit of 100 MW capacity (1X 100 MW). Though enough water is available in Kanjicode for possible scaling up of capacity, land availability was 'somewhat difficult' since a large PSU factory-BEML's coach factory is coming up nearby and further capacity addition may be a difficult.

In a bid to enhance overall power generation capacity under MPS umbrella, the group was scouting for land in Thoothukudi district in South Tamil Nadu for establishing a thermal power plant. But this was in a very early stage. The idea was to install three units in stages with a total capacity of 300 MW ( 3X 100 MW) but the ultimate configuration would depend on the availability of land, water etc and it would take another one year for the project proposal to take a final shape. Some locations have been identified in places such as Ottapidaram, Keela Eraal etc but no decision has been taken. He said he would require `at least 200 acres' for this mega project which would be a pure power plant.

Asked about the expertise of the group in entering into power generation on such scale, he said accidentally his group has entered into power generation already by installing a 6 MW power plant using the heat generated during the production of sponge iron at its Kanjicode unit.

To utilise the un-burnt coal, which was a by-product of sponge iron, the group went for a 4 MW capacity thermal power plant. While the state Electricity Boards were ready to buy power, coal could be sourced globally on long-term basis. As there was no marketing risk and as the demand for power is expected to remain steady, the group took the decision to plunge into power generation. With expanding steel manufacturing capacity, its own requirement for power would be going up and power generation would help insulate it from the vagaries of power supply.

Replying to a question as to whether Tamil Nadu, in which many under-construction power plants are nearing completion, would not turn power surplus putting pressure on new projects on the pipeline, he said while new plants may augment generation, demand was also moving up. He did not visualise a situation when the State would become power surplus putting pressure on private producers to find consumers.He said MPS Energy International will go for an IPO by 2011 to part-finance both the Kanjicode and Thoothukudi power projects. While details like the size of the IPO, merchant bankers for it etc were yet to be the finalised, only 45% of the equity may be diluted, retaining the balance 55% with the promoters, he said.

Taken From

The Hindu Business Line