BSES’s move is based on the recent announcement of Reliance Industries for a second open offer to acquire an additional 20-per cent equity in the company. The open offer is set to open within a fortnight.

Say senior BSES officials: “We may not tap the capital market to mobilise funds immediately. The Reliance open offer would alter the current equity structure of the company and it would put BSES in a more advantageous position to approach the capital market.”

BSES had plans to raise Rs 300-500 crore from the market for its expansion activities. During the fiscal 2001 the company faced huge accumulated losses of around Rs 900 crore on account of its power distribution subsidiaries in Orissa.

If the 20-per cent open offer is fully subscribed, Reliance’s stake in BSES would increase from the existing 44 per cent to 64 per cent, converting BSES into a subsidiary of Reliance Industries.

According to analysts with SBI Capital Markets, the Reliance brand would help BSES to raise more funds than envisaged earlier. “It would therefore make sense for BSES to hold its resources mobilisation programme.”

Meanwhile, industry sources say the financial institutions (FIs) that hold around 36-per cent stake in BSES are not very happy with the offer price of Rs 230.10 per share as it is lower than the last offer which was made at Rs 255 per share.

Among the FIs, Life Insurance Corporation (LIC) and Unit Trust of India (UTI) are the biggest stakeholders in BSES. LIC holds 15.42 per cent stake in BSES while UTI holds 8 per cent in the power utility.

Others are Oriental Insurance Company (3.09 per cent), New India Assurance (2.6 per cent), National Insurance Company (2.51 per cent), United India Insurance (1.57 per cent), General Insurance Company (1.65 per cent) and IDBI (1 per cent).

LIC officials say the company has not yet evaluated Reliance’s offer and no decision has been taken so far. If LIC and UTI collectively agree on selling their stakes, it will be easier for Reliance to see its offer go through.