#Budget2017-18: Drabu helps SPDCs wealthier rebirth

KL News Network


For the last many decades, state government will pump in money to build assets that state’s power generation company, the SPDC will own. The company will generate power and sell to the state but will never be paid.

The two sides never met to reconcile their accounts that hit both. Now Dr Drabu has settled it as part of a simple financial engineering.

PDD will pay J&K SPDC Rs 2,400 crore to clear its liabilities accumulated over the years. At the same time, J&K SPDC will return Rs 4,300 crore which it has taken as loan from the State Government over a period of time. Once these two transactions are done, government will infuse Rs 1,900 crore – the gap between the two transactions – as equity into the company.

When the SPDC was born in 1995, the government transferred all its power projects and their assets on a token value of Rs 1 against their actual value of Rs 916.54 crore. A fresh re-assessment will make it Rs 1000 crore now.

As the fresh valuation of SPDCs assets will add additional Rs 1,000 crore to its equity base, state’s lone power generator will become a debt- free company with an equity base of Rs 3,000 crore. Once these changes takes place, Drabu said SPDC will for an Initial Public Offering (IPO), thus becoming the second listed company of the state.

With this equity, Drabu said SPDC will be much better than many companies across India. J&K Bank has an equity base of only Rs 48 crore and its market capitalization once was Rs 9,000 crore.

Managing SPDC on professional lines, Drabu said is part of his Public Enterprise management. To help the PSU improve their balance sheets, he plans to “recall and re-infuse” all the plan funds given so far to all these Corporations so that the funds are re-deployed as equity to strengthen the capital base of these companies.

In case of SICOP, the budget has suggested recall of the premium collected by it on allotment of plots on behalf of Government. The recoveries will be ploughed back as capital, he said.


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