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Videocon is third bidder for Dabhol project

Reeba Zachariah

In a surprise development, the Rs 40-billion Videocon group has emerged as the mysterious third bidder for Enron's stake in the embattled Dabhol Power Company.

Confirming this, Videocon group chairman Venugopal Dhoot told Business Standard: "We are looking at acquiring Enron's stake in DPC. We are unlikely to go it alone and are looking at the possibility of roping in a multinational power company as a partner."

The Videocon group has already had a round of talks with the Maharashtra government, and has shot off a letter to DPC's lead institution, the Industrial Development Bank of India, expressing its interest in the beleaguered power company.

IDBI chairman P P Vora had told Business Standard that there was a third bidder for the stake. He had indicated the bidder was serious, but the institutions were checking how it would raise the funds required to buy the stake. When contacted about the Videocon bid, Vora said he would not be drawn into all this.

Dhoot said, "If none of the other bidders is interested, or they pull out, we are there to acquire DPC." The acquisition, if it materialises, would give the Dhoots 2,184 mw of capacity at one shot.

If the group gets a partner, it may help resolve the problem it faces in raising funds for the buyout. The Securities and Exchange Board of India (has barred the group from accessing the capital markets till April, 2004.

Dhoot, however, feels that raising funds from the overseas capital markets is a distinct possibility. The group's flagship company Videocon International has reserves of over Rs 14.50 billion and generated Rs 4.50 billion in cash from operations in the last financial year.

Both BSES and Tata Power have already submitted non-committal bids indicating a range of prices they are willing to cough up for a stake in DPC.

The Dhoots had been keenly looking at the power sector over the last few years, and had set the ball rolling for a 1,050 mw power project in Ennore, Tamil Nadu, along with National Power of the UK. However, the British multinational walked out of the venture, Videocon Power, earlier this year.

Videocon Power ran into rough weather, when the Tamil Nadu Electricity Board, the sole buyer of its power, cancelled the escrow cover, while the financial institutions were unwilling to fund it. TNEB had cancelled the escrow account on the ground that Videocon had delayed the financial closure of the project.

The Videocon group has of late been looking at a string of diversifications -- into aviation, insurance and telecom -- but its plans have not materialised.

It is one of the biggest players in consumer electronics and has a presence in power, petroleum and the ISP business.

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