Tata Power Company, the country’s largest private power utility, today announced its acquisition of Tata Petrodyne Limited, a private sector oil and gas exploration company for Rs. 145 crores. This acquisition is in line with Tata Power’s corporate strategy to establish a national presence in three core sectors of the country’s economy – power, energy and communication infrastructure.

The acquired company, Tata Petrodyne Ltd., is one of the private sector companies in the country to engage in gas and oil exploration and production. The company is in consortium with global majors Cairn Energy, Enron, Hardy Oil & Gas and leading Indian oil & gas companies ONGC and Hindustan Oil Exploration Company (HOEC) for its gas and oil exploration and development projects in three offshore blocks. These include two gas blocks in the Gulf of Cambay, Gujarat (North Cambay with Enron, ONGC and HOEC; South Cambay with Cairn Energy and ONGC), and one oil block in the Cauvery basin, Tamil Nadu (with Hardy, ONGC and HOEC). These consortia have entered into separate long term Production Sharing Contracts with the Government of India for each of these projects.

Recently the South Cambay consortium has been successful in exploring commercial gas reserves and efforts are on by the North Cambay consortium to explore gas in this Block. The Cauvery Basin Block continues to yield oil and further prospects of possible incremental oil reserves are under evaluation.

The consideration of Rs. 145 crore for the acquisition was based on a financial valuation by Messrs. S. B. Billimoria and Co. and a technical evaluation by a leading international petroleum consultant. The transaction will be financed from the company’s internal resources. This is a reinforcement of Tata Power’s strategy to deploy funds for strategic growth enhancement initiatives. With this acquisition Tata Petrodyne will become a 100 per cent subsidiary of Tata Power Company. Tata Power plans to augment the existing structure of the acquired company (management and employees) and is gearing up to identify and effectively leverage synergies to ensure an optimal strategic alignment of the power and energy businesses.

Commenting on the acquisition, Mr. Adi J. Engineer, Managing Director, Tata Power Company said, " Tata Power has identified the domestic energy sector as a high growth area with immense potential for value creation. The acquisition of Tata Petrodyne Limited represents a firm step to significantly strengthen our position as a leading player in this sector. We remain committed to accelerating business growth and pursuing our strategy aggressively in the areas of energy, power and communication infrastructure".

With this acquisition Tata Power will have direct access to gas and oil resources that can be used to meet the rapidly growing demands of its power projects. This would enable the company to generate increasingly cost-effective power on a national level in future.

For further information contact:
Percy D’Souza
Citigate Dewe Rogerson
Tel : 284 2728
Fax : 284 4561
Email : percy@cdr-india.com

Details to the announcement

Tata Power Company
Tata Power, the largest private power utility in the country was formed by the merger of Andhra Valley Power Supply Company and Tata Hydro-Electric Power Supply Company with Tata Power Company. The company has the distinction of being one of the few consistently profitable generators and providers of utility power in the country.

In FY 2000 Tata Power’s operating revenues stood at Rs. 2,781 crore and distributable profits (post statutory allocations) were a record Rs. 418 crore. The company is a pioneer in the field of power and energy in India and plans to use a combination of its large asset base, extensive R&D expertise and access to the latest technology to establish a leading national presence in the core sectors of power, energy and communication infrastructure.

Tata Power – Geared for Growth
Tata Power has identified three core sectors – energy, power and communication infrastructure as potential high growth sectors. The acquisition of Tata Petrodyne is an important part of Tata Power’s intention to establish itself as a leading player in the energy sector.

Power
Tata Power continues to aggressively expand its existing licensee power generating business in Mumbai. It has stepped up its direct marketing efforts and is increasing cost efficiencies and generation capacities by repowering its Trombay units. As part of its strategy to broadbase revenues within this sector and establish a national presence, the company is laying greater emphasis on Captive Power Plants (CPP) and Independent Power Projects (IPP) both of which generate higher returns than the licensee business. Tata Power currently operates two projects (Jojobera in Bihar and Wadi in Karnataka) and is on the final leg of implementing the 81.3 MW Belgaum Power Project in Karnataka. The company is also actively looking at mergers and acquisitions of developed projects or projects in an advanced stage of completion as a strategic route for expansion.

Energy
The acquisition of Tata Petrodyne, which fits in with its backward integration strategy, enhances Tata Power’s standing as a dominant player in the Indian energy sector. This will help increase Tata Power’s cost effectiveness and enhance its position as a leading producer of power in the country. Tata Power also recognises the strategic potential of leveraging Tata Petrodyne’s existing relationships with global energy majors such as Enron, Hardy Oil & Gas and Cairns Energy to further its business interests in the related core sectors of power and communication.

Communication infrastructure
Tata Power plans to spearhead the Tata Group’s thrust into the broadband sector and synergise its activities with that of the other group companies to optimally exploit the exponential growth potential of this sector. In Mumbai, Tata Power already has a 400 km optic fibre network and has an additional 1200 kms Right of Way (RoW) for further development. It plans to form alliances with leading, specialised players in the communication sector, especially in the areas of last mile access, RoW and content. This would enable Tata Power to rapidly establish a leading presence in this sector and provide a host of high quality, wide spectrum broadband services such as e-commerce, video streaming, VoIP, video conferencing, net hosting, infrastructure for ASP’s and video on demand to customers at a single point of contact.