ADAG considers power equipment manufacturing

The Reliance Dhirubhai Ambani Group (ADAG) is evaluating options to venture into the power equipment business.

"We are talking to four, five global companies for a strategic partnership, but we are yet to decide on whether to buy or make core critical equipment for our plants," Chairman Anil Ambani said at a news conference today.

"If we decide, neither Reliance Energy nor Reliance Power will be involved in that," he said.

The media meet was called to announce Reliance Power Ltd's initial public offer from January 15 to 18 in a price band of Rs 405-450 a share.

The share sale, aimed at mobilizing up to Rs 11, 500 crore, would be the country's biggest mop-up through an IPO. Ambani said the company expects its shares to be listed on the bourses by the first week of February.

The ADAG chairman said group company Reliance Natural Resources Ltd is scouting for alliances to source coal from outside India, to secure long-term fuel supply for its coal-based power plants.

"Many countries like China, Indonesia, Philippines and Australia have good coal reserves and we are talking to them. They have shown interest to supply coal on a long-term basis," Ambani said.

Besides, the company also proposes to bid for licenses for oil and gas exploration in the forthcoming rounds of bidding.

Reliance Power, which has 28,200 mw of generation capacity in the pipeline, is building coal-based power plants at Sasan (4000 mw) and Krishnapatanam (4000 mw), but has no plants in operation yet.

Ambani said Reliance Power was also open to inorganic opportunities. "We are looking to acquire a 2500 mw operating asset in Singapore."

Reliance Power will float special purpose vehicles to develop the capacity in the pipeline. He said the company would not limit itself to coal and gas fired plants, but it would also invest in wind power and nuclear power.

The proceeds of the Reliance Power IPO will be utilised to fund projects like Rosa Phase I & II (600 mw each) in Uttar Pradesh, Sasan (3960 mw) in Madhya Pradesh, Butibori (300 mw) and Shahapur (1200 mw) in Maharashtra and Urthing Sobla (400 mw) in Uttarakhand.

It will be the first public offering in which retail investors, who constitute about 30 per cent, will get a discount of about Rs 20 a share.

Further, in a staggered payment facility, retail investors would be required to pay only 25 per cent of the total investment amount at the time of submitting the application and the rest on allotment. Recently, the follow-on public issue by ICICI Bank had also granted this option to retail investors.

"Reliance Power IPO will be not only the largest IPO so far, but also the first to offer a discount for retail investors," he said.

The issue will constitute 11.5 per cent of the post issue paid-up capital of the company.