Mumbai: Reliance Industries (RIL) has outlined a business plan for BSES, focusing more on power distribution, engineering and procurement and the coal washeries business.
The business plan, conceived by the petroleum major, which announced its second open offer to acquire the controlling stake in BSES, focuses on a more aggressive foray into the distribution sector, especially in states like Andhra Pradesh, Karnataka and Uttar Pradesh.
The plan also gives much attention to bidding for EPC (engineering, procurement and construction) and O&M (operations and maintenance) contracts for turnkey projects, and increasing the capacity of BSES's coal washeries and generation capacities.
When contacted, a BSES spokesperson said: ''RIL is in the process of acquiring a majority stake in BSES. RIL's future plans related to BSES is in a very preliminary stage.'' BSES has been viewed as a powerful vehicle to drive RIL's dreams in the power sector, and make the group an energy conglomerate.
The business plan also envisages more business synergies between BSES and RIL such as the potential use of gas (RIL gas to be used by BSES power plants), telecom (a well coordinated use of BSES Telecom for the development activities of Reliance Infocomm). RIL has so far invested around Rs 1,400 crore to accumulate its holding in BSES. Currently, RIL has a little over 44 per cent stake in BSES.
But, out of the 10 subsidiaries of BSES, only BSES Infrastructure Finance and ST-BSES Coal Washeries are doing well. Others including BSES Kerala Power, three Orissa power distribution companies and BSES Telecom have incurred huge financial losses over the past few years.
The 2.5-million tonne coal washery of the joint venture company ST-BSES Coal Washeries at Bilaspur, Madhya Pradesh, has already started supplying washed coal to other thermal power plants, and is making good returns. Similarly, the contract division of BSES has undertaken many EPC projects and has a healthy backlog of projects in hand.
Also, it is expected that the electricity bill, which was recently cleared by the Parliamentary Standing Committee, would make the power sector attractive to Indian companies.
At present, BSES is going through one of its worst phases - financially. Its net profit fell 83 per cent to Rs 14.6 crore for the third quarter of the current fiscal from Rs 86.8 crore recorded during the corresponding quarter of the previous year. The major reason is the drastic fall in total income to Rs 680.6 crore during the quarter from Rs 717.9 crore.