PGCIL Board okays 20% stack sale FPO Proposal at Rs 8,000 cr

In a move that will ensure its compliance with the recently amended Securities Contracts (Regulation) Rules, 1957, the state-run transmission major, Power Grid Corporation of India Limited (PGCIL), has announced a 20% stake sale, via a follow-on-public-offer (FPO). PGCIL currently has a 15.78% public holding, while as per the notification issued on June 4, 2010, all companies listed on the bourses are required to maintain a minimum public holding of 25%. The Board of Directors of the PGCIL, at its meeting held on July 2, 2010, approved the issue, which would involve a fresh issue of 10% of the existing paid up share capital, along with the dilution of 10% stake, out of the Government of India's (GoI) holding in the PSU. A proposal seeking approval for the offer would be soon placed before the Cabinet.

According to the latest data available with the stock exchange, around 3,63,49,08,335 shares of PGCIL are held by GoI, while public-holding amounts to 57,39,32,895 shares. The transmission enterprise, in September 2007, raised Rs 2,985 crore through its initial-public offer (IPO), which was oversubscribed 65 times. The company intends to raise, approximately, Rs 8,000 crore through its current proposal. PGCIL has proposed an investment of Rs 55,000 crore during the current Plan period, to add about 67,000 ckt. km of lines and around 90,000 mega-volt-ampere (MVA) of transformer capacity.

The utility has, recently, also announced its intentions to invest Rs 50,000 crore, for developing seven transmission corridors over the next five years, to facilitate transmission of around 55,000 MW power that would be generated by the upcoming independent power projects (IPP) and merchant power projects (MPP) in the states of Chhattisgarh, Orissa and Jharkhand. PGCIL wheels about 45% of the total power generated in the country via its transmission network. The transmission utility has a pan India presence, with around 77,000 ckt. km of transmission lines and 124 high voltage and extra-high voltage sub-stations, with a total capacity of 89,000 mega-volt ampere (MVA).

Out of a total of around 4,500 listed companies in India, at least 180 companies, including 35 PSUs, will have to offload their respective promoters` stakes to meet the revised Securities Contracts norm. Reliance Power Limited and Jaiprakash Power Ventures are among the leading private sector power firms that would also need to increase their public shareholding. The Finance Minister, in his Budget speech for 2009-10, had proposed to raise the threshold for non- promoter, public shareholding for all listed companies.