Bajaj Hindusthan Sugar plans to sell its entire 17.51 per cent stake in the group firm Lalitpur Power Generation Company Ltd (LPGCL), estimated to be worth Rs 11 billion.
The company had invested Rs 7.7 billion in LPGCL and now needs to divest non-core assets as per the debt restructuring scheme approved by the lenders.
Bajaj Hindusthan Sugar has convened an extraordinary general meeting on August 4 to seek shareholders’ approval for sale of its share in LPGCL to another group firm Bajaj Energy Ltd.
In a notice to shareholders, Bajaj Hindusthan said that the company’s investment in LPGCL has been identified as “non-core to the sugar and allied business activities”.
The company holds 1,54,39,900 shares of Rs 10 each, constituting 17.51 per cent of the paid-up capital of LPGCL.
“The cost of investment by the company for 17.51 per cent equity shares in LPGCL is Rs 7.70 billion,” the company said, adding that these shares are presently pledged against the loan facilities availed by the company and LPGCL.
LPGCL has completed the work on setting up of its 1980 MW (3×660 MW) coal-based supercritical thermal power project at Lalitpur district in Uttar Pradesh and it is operating with full capacity since December 2016.
As per the restructuring schemes, Bajaj Hindusthan said it is required to “bring back the funds invested in LPGCL, which shall be utilised in accordance with the directions of the lenders”.
The company’s board had on July 6 approved the sale of LPGCL shares to Bajaj Energy, which is a related party of the company.
On the consideration for this stake sale, Bajaj Hindusthan informed that a CA firm and independent valuer Mehta Choksi & Shah have valued the equity shares of LPGCL at Rs 710.84 per share.
“Based on the above the value of 1,54,39,900 equity shares of LPGCL held by company aggregates to Rs 1,097.53 crore,” the notice said.
Bajaj Hindusthan said the company incurred losses during financial years 2011-12, 2012-14 (18 months), 2014-15, 2015-16 and 2017-18 due to lower realisation in the sugar business, resulting in increase in debt levels.
The company said the “sugar industry has passed through a prolonged cyclical downturn primarily characterised by high sugarcane prices, surplus sugar production and high carry over inventory with consequent lower realisations”.
The company’s lenders had implemented debt restructuring scheme firstly under JLF route in 2014 and thereafter under the Scheme for Sustainable Structuring of Stressed Assets (S4A) in 2017.
Bajaj Hindusthan has 14 mills in Uttar Pradesh with cane crushing capacity of 1.36 lakh tonne per day.
Besides sugar, the Shishir Bajaj-led Bajaj Group has interests in power, ethanol, real estate, personal care products and infrastructure.
The group’s power venture includes Bajaj Energy, with 450 MW thermal power generation commissioned in 2012 and LPGCL with a total of 1,980 MW thermal power generation capacity.
Last year, Bajaj Hindusthan had shelved its plan to sell its co-generation power business, having 449 MW capacity at 14 locations in UP, to LPGCL for about Rs 12 billion.