Spark heard on the street that the GVK Power & Infrastructure, Hyderabad based company is planning to buy coal mines of Australia based firm Hancock Prospecting. The deal will cost around $2.2 billion (about Rs 9,900 crore) and will include mines and the transport infrastructure which will be needed to move the coal at least 500 km to a port.
This move of GVK will assist the company for steady and secure access to the fuel for all its future planes in power sector and will be beneficial for the company as in India the fuel supply gets crimped by environmental holdups and troubles in the Maoist dominated coal producing states.
The deal will give GVK steady and secure access to the fuel for its plans in the power sector as supply in India gets crimped by environmental holdups and troubles in the Maoist-dominated coal-producing areas.
The cost of Coal Mines Alpha coal and Kevins’s corner will be around $1.3 billion and the associated losgistics will be around $900 million.
GVK has tied up with ICICI Bank, Standard Chartered Bank and Axis Bank for funding the transaction with Ernst & Young as an advisory.
Hancock is run by Gina Rinehart, Australia's richest woman. The Hancock sale was initiated through an auction in which the bidders included GMR Infrastructure, JSW Energy and Essel Mining of the Aditya Birla Group.
GVK, which operates the Bangalore and Hyderabad airports, three gas-based power projects and the Jaipur-Kishangarh expressway, ended the 2010-11 financial year in March with sales of 1,900 crore and net profit of 155 crore. Its share price has fallen by more than two-thirds in the last 52 weeks, valuing the company at 2,600 crore. On Thursday, the GVK stock fell 4.6% to 16.60.
The company, which has debt of about 5,500 crore, is building a 540 MW coal-fired power station in Punjab.
The two coal mines that GVK will buy have combined reserves of 7.6 billion tonnes and are located in the Galilee Basin in Queensland province. They can produce 30 million tonnes of coal annually over a life of 30 years.
The deal, when it is signed, will be the third major acquisition by an Indian company of Australian coal mines as local firms venture overseas to overcome supply problems at home.
Adani Enterprises paid about 12,000 crore to Linc Energy and Lanco Infratech agreed to buy the holdings of Griffin Coal earlier this year for nearly 3,500 crore. India is likely to import nearly 100 million tonnes of coal this year.
The power sector is one of the largest consumers of the fuel, accounting for 71% of demand, which is met through linkages with state-run Coal India and Singareni Collieries.
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