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AV Birla group denies bid for Enron unit

The Aditya Vikram Birla Group, a leading Indian conglomerate, on Monday denied newspaper reports it was looking to buy Enron Corp's 65-per cent stake in the beleaguered Dabhol Power Company.

"There has been no expression of interest in Dabhol. We are not interested," a top AV Birla group official told Reuters.

Two leading business dailies earlier said the group, whose interests range from textiles to cement and carbon black, is eyeing Dabhol to expand its interests in the domestic power sector.

The Economic Times and the Financial Express said the group was exploring the possibility of submitting an expression of interest to Indian financial institutions to buy Enron's stake in the company.

An official of state-run Industrial Development Bank of India, the leading financier of the $2.9 billion project in Maharashtra, said he has not heard from the Birla group.

"We have not received any official communication from them," the official, who did not wish to be identified, told Reuters.

The spokesman for Dabhol was not available for comment.

Fighting for survival

Enron Corp, which is fighting for survival in the United States amidst investor doubts over its corporate governance practices, owns 65 per cent of Dabhol. General Electric Co and Bechtel own 10 per cent each, while the Maharashtra State Electricity Board owns 15 per cent.

Dabhol and MSEB have been fighting over payment defaults and high tariffs for over a year. The dispute has affected India's efforts to attract foreign investment in the power sector and caused Enron and its US partners to announce plans to exit the project.

Tata Power Company Ltd, India's largest private sector utility firm, and BSES Ltd, another utility company and a member of India's largest conglomerate, the Reliance Group, are already in talks to buy Enron's stake.

The AV Birla Group has adopted the route of mergers and acquisitions in recent years to consolidate its position in key industries.

Last week, one of its group companies, Grasim Industries Ltd, bought a 10-per cent stake in India's largest cement maker, Larsen & Toubro Ltd.

Earlier this year, Indian Rayon & Industries Ltd, another group company, entered the information technology sector by buying out France's Groupe Bull SA's 50.35 per cent stake in PSI Data Systems.

But the group's track record in the power sector has been less than impressive.

Two joint ventures with Britain's Powergen Plc to produce over 1,000 megawatts of electricity in two Indian states have not made much headway since they were announced in the mid-1990s.

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