Tata Power Aims to Acquire UP Discoms as Part of Core Business Expansion
Tata Power is set to expand its footprint in Uttar Pradesh by bidding for two electricity distribution companies, Dakshinanchal Vidyut Vitran Nigam and Purvanchal Vidyut Vitran Nigam. The company’s Managing Director, Praveer Sinha, announced that the tender documents are expected to be released soon, aligning with Tata Power’s strategy to enhance its transmission and distribution business. Currently managing electricity distribution in several regions, Tata Power aims to significantly increase its customer base over the next five years.
Plans for Expansion in Uttar Pradesh
Tata Power is gearing up to participate in the privatization of two major electricity distribution companies in Uttar Pradesh. The company plans to bid for Dakshinanchal Vidyut Vitran Nigam and Purvanchal Vidyut Vitran Nigam, which are set to be divided into six operational circles. Praveer Sinha stated that the bid documents are in the final stages and are anticipated to be available by the end of the month. This move is part of Tata Power’s broader strategy to grow its transmission and distribution sector, which is a significant contributor to its revenue and profits. Currently, Tata Power serves 12.5 million customers across Mumbai, Delhi, Ajmer, and Odisha, and it aims to increase its customer base to 40 million within five years.
Improving Financial Health of Distribution Companies
The two distribution companies in Uttar Pradesh serve 42 out of the 75 districts in the state. The Uttar Pradesh government is looking to privatize these companies to reduce losses and enhance operational efficiency. Tata Power has a proven track record in improving the financial health of distribution companies, as seen in its management of the Odisha discom, where profits surged by 86% from Rs 236 crore in FY22 to Rs 439 crore in FY25. Tata Power’s experience positions it well to capitalize on opportunities in the power distribution sector, especially as it seeks to implement effective management practices in the newly acquired companies.
Investment in Renewable Energy and Future Plans
In addition to its plans in Uttar Pradesh, Tata Power is also preparing to enter the small modular nuclear reactor market, pending legal clarity on the Nuclear Power Act. Sinha mentioned that amendments regarding civil liability and private sector participation are expected to be discussed in the upcoming monsoon session. Tata Power is currently evaluating sites and technology for this venture, which could potentially serve clients like Tata Steel and Tata Motors as part of its clean energy solutions. The company plans to allocate Rs 25,000 crore for capital expenditure in FY26, with a significant portion directed towards renewable energy projects.
Focus on Core Business Operations
As part of its strategic realignment, Tata Power intends to exit Tata Projects, a contractor known for building significant infrastructure, including the Parliament building post-independence. Sinha emphasized that the company is concentrating on its core businesses, which include renewables, hydro, transmission, and distribution. This focus is essential for securing the necessary capital to support growth in these areas. In FY25, Tata Power’s capital expenditure reached Rs 16,000 crore, falling short of its Rs 20,000 crore target due to delays in various projects. The company is now prioritizing investments that align with its main business objectives.
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