The Telegraph
Since 1st March, 1999
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BSES keeps distance from subsidiaries

Mumbai, June 7: BSES Ltd, the heavyweight power utility of the Reliance group, is no longer ready to bear the burden of its non-performing subsidiaries. As a result, by the end of the last financial year it had spun off three of its loss-making power distribution subsidiaries in Orissa and two recently-acquired power distribution firms in Delhi in order to clean up its own balance sheet.

Apart from these five firms, the Mumbai-based power company sold off its entire stake worth Rs 15 crore in BSES Infrastructure Finance to another group company.

Though BSES continues to hold a significant shareholding in all these companies, except for BSES Infrastructure Finance, there was no subsidiary on the power major’s roster for the year ended March 31, 2003.

As the holding of BSES had come down below the critical 50 per cent-mark in these subsidiaries, their performances had not been clubbed with the accounts of the power utility for 2002-03.

Most of the hive-offs took place at the fag end of the last financial year. Therefore, some of the firms remained subsidiaries till March 28, while the rest till March 30.

Quite significantly, the seven subsidiaries where BSES hived off part of its holding includes two companies set up this year to distribute power in Delhi — BSES Yamuna Power and BSES Rajdhani Power. BSES has not put forward any reason for the hive-off in its latest annual report.

The exercise saw seven subsidiaries being spun out of the BSES fold. All seven subsidiaries were in the red, which would get reflected in the consolidated balance sheet of BSES had they remained within its fold, experts say.

The subsidiaries to be hived off were — BSES Yamuna Power, BSES Rajdhani Power, North Eastern Electricity Supply Company of Orissa, Southern Electricity Supply Company of Orissa, Western Electricity Supply Company and Tamil Nadu Industries Captive Power Company.

The company sold shares of BSES Rajdhani and BSES Yamuna as late as March 28, 2003. It sold a whopping 11.93 crore shares of BSES Rajdhani, which was purchased during the year, to a group company on March 28, 2003, just three days before the fiscal ended. BSES, however, retains 11.9 crore shares valued at Rs 119 crore.

In BSES Yamuna Power, the company continues to hold 3.02 crore shares valued at Rs 30.26 crore, whereas it sold around 2.8 crore shares in BSES Yamuna during the year.

Regarding the Orissa subsidiaries, BSES has no clue on how much the losses would add up to.

However, the new management is conscious of the several areas in BSES which needs “urgent attention”.

The chairman's letter to shareholders has mentioned the “difficult state of affairs” in the three distribution companies in Orissa, the issues of constraining optimal performance of the power generating plants in Andhra pradesh and Kerala.

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