Date:07/12/2007 URL: http://www.thehindubusinessline.com/2007/12/07/stories/2007120755870300.htm

Back Damodar Valley Corp looking at IPO

To appoint consultant for organisation restructuring

Creating corporates under it may help the corporation to continue with its business and socially beneficial activities, while also unlocking the huge value it had created over the last 5 decades.

Pratim Ranjan Bose

Kolkata, Dec 6 The Rs 4,300-crore Damodar Valley Corporation (DVC), created under the DVC Act of 1948, plans to corporatise itself in order to hit the capital market with an IPO in the not too distant future.DVC is exploring the possibility of an organisation restructuring so as to create one or more companies under the corporation.

According to sources, the corporation will shortly appoint a consultant to suggest the measures to take it through to the IPO.

Following an in-principle approval from the board of directors – which include nominees of three stakeholders, the West Bengal, Jharkhand governments and the Centre – recently, DVC has already shortlisted two such consultants of international repute.

“The consultant will not merely be advising on the restructuring model but is expected to help us to extract maximum value from the capital market,” a DVC source said.

Unlocking value

According to sources, retention of DVC’s status and creating corporates under it, may help the corporation to continue with its business (like thermal power production) and socially beneficial (like flood control and irrigation) activities and also unlock the huge value it had created over the last five decades.

DVC was created in the line of Tennessee Valley Corporation in the US primarily to control the devastating floods in Damodar valley and use the water resources for socially gainful purposes.

Having more or less fulfilled its agenda on flood control and using water resources for irrigation and hydro-electric generation, DVC had shifted gears towards thermal power generation by using the abundant coal resources in the valley during last two decades.

Raising capacity

The stress on thermal power generation has increased manifold in recent years and DVC is now racing to step up its capacity from 2,210 MW to 9,510 MW by 2010-11. The corporation posted a profit of Rs 1,239 crore in 2006-07.

As a step towards corporatisation, DVC, as suggested by Ferguson & Co, has already decided to introduce profit centre accounting practice beginning 2008-09.