Tata. Electric Company: Letting go of a prized catch
Tata Electric Company's plan to buy a 51% stake in the Central Electricity Supply Corporation of Orissa (Cesco) has come a cropper as the company has failed to respond to the proposal put up by the Grid Corporation of Orissa (GRIDCO).
TEC, India's largest private sector power supplier, comprises three companies - Tata Power, Tata Hydro - Electric and Andhra Valley Power. The company holds a license to supply power in to the Mumbai area until 2014.
TEC has been actively pursuing opportunities to acquire the electricity distribution rights for other areas (Orissa was one such area). The company, which has a limited growth potential from its power generation and distribution business in Mumbai, has identified power distribution as one source of future growth. However, the falling through of the bid to purchase a 51% stake in Cesco is a major setback to the company.
Analysts expect the TECs to derive revenue growth from the captive / independent power projects. Though many analysts have rated the stock as a 'BUY', some still continue to rate it as a 'HOLD'. This mixed view has arisen partly due to the non-aggressive nature of the management.
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