The airport construction specialist is looking for coal mines acquisition especially in the wake of increased demand for coal. The company is offering equity worth of the Rs 3,965 crore to Qualified Institutional Buyers (QIB) for the purpose. The procured funds will be utilised for the acquisition of coal mines.
GMR had allotted its shares with a face value of Rs1 at a premium of Rs 238 per share. The Management Committee of the board of directors at its meeting approved the allotment of shares to QIBs.
GMR’s investment plan in coal fields has strategic importance. The country is aiming to create 400000 MW electricity through ten coal based Ultra Mega Power Plants (UMPP) during the Eleventh Five Year Plan. Of these only three plants including Mundra and Sasan are tendered to Reliance and Tata Power. GMR is a major player the power sector also. In the future it may get one of the UMPP.
For coal based power plants, ensuring adequate supply of coal at affordable price is the factor which will determine the margin of UMPPs. At present, the price of coal in the international market is soaring up due to high demand from steel and power producers of China. Domestic coal price in India has also shown the increasing international trend over the last year. Hence for coal based power companies, acquisition of coal mines is important before going for power projects.
For Sasan, the Reliance need not worry as the project is coal pit bed. Tata Power has made recent coal field acquisitions in Indonesia to ensure supply. Hence for GMR it is necessary to own coal reserves before acquiring power projects.
