MUMBAI, JUNE 14: The board of directors of three Tata Electric Companies - Tata Power, Tata Hydro-Electric and Andhra Valley Power Supply - today approved a plan to merge the three companies into one entity ``for greater leverage to participate in large power projects''. Tata Hydro and Andhra Valley will merge with Tata Power and the boards approved a swap ratio of four shares in Tata Power for every five shares in each of Tata Hydro and Andhra Valley.The board of Tata Power also approved plans to come out with a Rs 300 crore cumulative redeemable preference shares to part-finance the company' capital investment plans of Rs 3,580 crore in one or more tranches.Asked whether the consolidation was spurred by hostile takeover threat, TEC chairman Ratan Tata said ``we want to ensure that our companies are not undervalued and they reflect the full value so that shareholders also see the growth prospects''.TEC director C R Vevaina said the merger of the three companies ``gives us a stronger balance sheet and greater leverage to participate in big power projects.'' The swap ratio is based on an independent valuation by SB Billimoria & Company and merger is to be effective April one, 2000, he said.The merger has been facilitated due to the reduction in the stamp duty structure towards which it had to pay Rs. 60 crore. Vevaina said during the year, TEC acquired five per cent stake through creeping acquisition.Post merger, the promoters stake would stand at over 26 per cent, Vevaina said, adding that pre-merger, the collective holding in the three companies was 31 per cent. Financial Institutions holding would continue to be at 33 per cent, he said.The operating revenues of three companies put together were higher at 21 per cent at Rs 2,781 crore in 1999-2000 compared with Rs 2,300 crore last year while net profit stood at Rs 468.64 crore, up by 41.89 per cent against Rs 330.07 crore the previous year. The board has recommended a final dividend of five per cent, in addition to the interim dividend of 37 per cent declared earlier, making a total of 42 per cent against 37 per cent in the previous year.Outlining capital investment plans for the next three years, Vevaina said Rs 2,830 crore worth of projects were currently under execution and it proposed to invest Rs 1,900 crore. The company plans to invest Rs 1,849 crore towards hydro enhancement, consumer development, system capital expenditure and repowering the Trombay power plant, he said adding in the non-licence areas of Jojobera (Bihar), Belgaum, Wadi and Mangalore (all in Karnataka) TEC would invest Rs 1955 crore.In setting up a broadband optic fibre communications network, TEC would invest Rs 375 crore while for setting up the six million tonnes per annum LNG terminal and jetty it would spend Rs 554 crore.On the company's broadband foray, A J Engineer, executive director, said TEC enjoys right of way to the tune of 1200 km in Mumbai and has already wired 400 kms. ``In the next three to five years, we will bid for partnerships with right of way owners across the country,'' he added.
