JSW, Greenko, Adani, Tata tapped for PTC India stake

New Delhi: Greenko, Tata Power, JSW Energy and the Adani Group have been approached to assess their interest in acquiring a strategic stake in PTC India, people in the know said.

Five public sector undertakings, including four promoter firms of PTC India, are planning to sell their stake in the power trading company that is hit by a controversy over governance issues at its financial services subsidiary.

The promoters - NTPC, NHPC, Power Finance Corp and Power Grid Corp of India - hold a combined stake of around 16% in PTC India. Damodar Valley Corp, which owns a 3.3% ownership, has also decided to divest its shareholding.

More Cos could be Approached
This will take the total stake on offer to a potential strategic investor at nearly 20%, these people said.

Another state-run shareholder, Life Insurance Corp of India, isn't planning to sell its 5.96% stake, they said.

NTPC, NHPC, Adani Group, Power Finance Corp, Power Grid Corp and Damodar Valley did not respond to ET's queries. Tata Power, Greenko and JSW Energy declined to comment.

ICICI Securities, which was hired to identify a buyer for the stake in PTC India, has approached the potential buyers and could seek interest from more entities, the people said.

The promoters and Damodar Valley will each appoint an internal committee to arrive at a floor price for the stake sale before taking the process forward. It could take about 4-6 weeks for the floor price to be finalised, they said.

On January 12, PTC India informed stock exchanges that it was "not aware of any such stake sale by the promoter companies".

Stock Price
On Tuesday, the company's shares rose 5% to close at Rs 95.90 on the BSE, giving it a market capitalisation of Rs 2,839 crore. At this price, a 20% stake in PTC will cost nearly Rs 570 crore.

But the promoters would expect a significant premium on the stock price, which has taken a beating after auditors of the financial services subsidiary, PTC India Financial Services, brought to light discrepancies in its financial reporting.

The shares are now trading 15% lower compared with early last year, when the governance issues first came to light. Since then, several independent directors - former diplomat Preeti Saran, BSE chairman SS Mundra, former secretary in the finance ministry Sushama Nath and Jayant Gokhale, founder of accounting firm Gokhale & Sathe - resigned from PTC India. In her resignation letter, Nath said since the issues in its subsidiary surfaced, governance standards had deteriorated at PTC India as well.

On Tuesday, the company announced it appointed Prakash S Mhaske as an independent director. Mhaske had retired as chairman of the Central Electricity Authority recently.

PTC India was incorporated in 1999. It has a Category-I licence from the Central Electricity Regulatory Commission, which gives it permission to trade unlimited volumes of electricity. It has the largest market share in the electricity trading business.

As India's power capacities inch upwards of 400 gigawatts and plans are in place to double that by 2030, the need for a vibrant market for power trading will increase as new sets of generators enter the market looking for possible customers to purchase their power. PTC India is an intermediary that matches suppliers with buyers of power. It enters into short- and long-term contracts ranging from a few months to years with power generators and makes a commission on selling their power onwards to distribution companies or industrial customers. With several companies now buying renewable power from generators directly, PTC India is likely to play a key role in intermediating such deals.