Salt-to-automobile conglomerate Tata Group is in a tough spot with Tata Power. In a new development, company chairman N Chandrasekaran said on Wednesday that the company is trying to sell off non-core assets in a bid to reduce debt.
Currently, the company has gross debt of around Rs 48,816 crore on its books. Speaking at Tata Power's 98th annual general meeting (AGM) in Mumbai, Chandrasekaran said, "The company is examining various debt reduction options, including sale of non-core assets," Mint reported.
The company is facing operational headwinds at its Mundra power plant in Gujarat, as it became unviable after coal exporter Indonesia sharply increased coal prices since 2010.
Coastal Gujarat Power Ltd (CGPL) appealed to the state electricity regulator as the company failed to convince its customers to pay more prices for the power.
Following this, the appellate electricity tribunal allowed compensatory tariffs to make up for the higher costs. But in April this year, it was struck down by the Supreme Court. Soon after the apex court verdict, the company offered to sell 51 percent stake in CGPL for a token Re 1, the business daily reported.
"We still don't know how we can solve the Mundra issue... we currently have an under-recovery somewhere between Rs 900 crore to Rs 1,000 crore. Nevertheless, we would like to solve this issue and the only solutions are either to get some kind of resolution with the procurers or regulators or find cheaper coal," Chandrasekaran said at the AGM.
The Tata Sons Chairman said that currently, Tata Power has more than 90 subsidiaries and associate firms, and the firm has a project outlay of Rs 7,900 crore for the Mundra project.
The company is in the process of scrapping its 60-year-old Mumbai-based flagship Trombay Power Station, said Anil Sardana, chief executive officer and managing director of Tata Power.