IPO funds will help co raise Rs 40,000 crore debt
Reliance Energy’s decision to raise equity finance for the upcoming ultra mega and other power projects through the public route is well-timed and may be a good business proposition.
By Ashishkumar Agarwal and Ranjit Shinde, TNN |
Reliance Energy’s decision to raise equity finance for the upcoming ultra mega and other power projects through the public route is well-timed and may be a good business proposition. The ultra mega project, requiring a total investment of around Rs 18,000 crore, is one of the two large projects being undertaken, involving equity finance of Rs 3,600 crore at 80:20 debt-equity ratio.
The recent government decision to allow the developer to increase the capacity of these plants beyond 4,000 MW and sell excess power at market rate is an added incentive.
The company is expected to raise close to Rs 10,000 crore through the IPO. At the prevailing debt-equity ratio for power projects, the company can mobilise up to Rs 40,000 crore of debt on the basis of this equity, which would be enough for around 12,000 MW of power projects. Under the assumption of 80% capacity utilisation and Rs 2.5 per unit of power, this can generate revenue of around Rs 20,000 crore.
Another interesting feature of the proposed IPO is its striking similarity with the public issue of Reliance Petroleum last year, where money was raised on the strength of a new project. However, while the promoter had the experience of developing a similar project then, for Reliance Power, the proposed plant is going to be the first project of this size. On the positive side, the government may make the environment more supportive for power projects given the wide supply-demand gap.
German deal strengthens foothold for Hexaware
Hexaware Technologies has bagged a large contract to deliver IT solutions to the financial arm of one of the largest banking conglomerates in Germany. The project worth 5 million euros, spanning over 15 months, will strengthen Hexaware’s foothold in the conservative German market.
The deliverables of the project include designing, development and integration of the solution with the existing system. The company expects to offshore over 60% of the total deliverables. A substantial offshore component makes the project more lucrative. Moreover, such an enterprise-wide application gives Hexaware access to various functions of a large conglomerate increasing future scope for higher client engagement.
The impact of this contract on financials may be visible on a more prominent basis in the next fiscal ending December 2008 as the preliminary engagements and designing stage will last until November 2007.
For years, Indian IT companies have been trying hard to reduce their dependence on the US market, which accounts for more than two-thirds of India’s IT exports.
This is crucial given the slowing economic growth in the US. In such a scenario, European market offers lucrative opportunities to grow given stable economic growth and high technology spends by some of the European countries. However, this may not be easy due to the heterogeneous nature of this market and differences in culture and languages across the European continent.
Hexaware has been active in the German market, which accounts for 11% of the company’s revenue. It expects the share of revenue from the European market to increase from 27% to around 29% by March 2008.
The recent government decision to allow the developer to increase the capacity of these plants beyond 4,000 MW and sell excess power at market rate is an added incentive.
The company is expected to raise close to Rs 10,000 crore through the IPO. At the prevailing debt-equity ratio for power projects, the company can mobilise up to Rs 40,000 crore of debt on the basis of this equity, which would be enough for around 12,000 MW of power projects. Under the assumption of 80% capacity utilisation and Rs 2.5 per unit of power, this can generate revenue of around Rs 20,000 crore.
Another interesting feature of the proposed IPO is its striking similarity with the public issue of Reliance Petroleum last year, where money was raised on the strength of a new project. However, while the promoter had the experience of developing a similar project then, for Reliance Power, the proposed plant is going to be the first project of this size. On the positive side, the government may make the environment more supportive for power projects given the wide supply-demand gap.
German deal strengthens foothold for Hexaware
Hexaware Technologies has bagged a large contract to deliver IT solutions to the financial arm of one of the largest banking conglomerates in Germany. The project worth 5 million euros, spanning over 15 months, will strengthen Hexaware’s foothold in the conservative German market.
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The deliverables of the project include designing, development and integration of the solution with the existing system. The company expects to offshore over 60% of the total deliverables. A substantial offshore component makes the project more lucrative. Moreover, such an enterprise-wide application gives Hexaware access to various functions of a large conglomerate increasing future scope for higher client engagement.
The impact of this contract on financials may be visible on a more prominent basis in the next fiscal ending December 2008 as the preliminary engagements and designing stage will last until November 2007.
For years, Indian IT companies have been trying hard to reduce their dependence on the US market, which accounts for more than two-thirds of India’s IT exports.
This is crucial given the slowing economic growth in the US. In such a scenario, European market offers lucrative opportunities to grow given stable economic growth and high technology spends by some of the European countries. However, this may not be easy due to the heterogeneous nature of this market and differences in culture and languages across the European continent.
ADVERTISEMENT
Hexaware has been active in the German market, which accounts for 11% of the company’s revenue. It expects the share of revenue from the European market to increase from 27% to around 29% by March 2008.
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