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Tata Power has a high debt burden and here’s how it is planning to tackle it

The company is exploring the InvIT route for select renewable energy assets and has initiated preliminary discussions for the same with advisors and Tata Sons
New Delhi: In order to tackle its high debt burden, Tata Power is considering the option of monetising its renewable energy assets through the infrastructure investment trust ( InvIT) route, sources aware of the matter said. InvITS are instruments like mutual funds that enable direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return. Both public and private InvITs can be listed under SEBI norms.

Final call will be taken after consultations with Tata Sons

“The company is exploring the InvIT route for select renewable energy assets and has initiated preliminary discussions for the same with advisors and Tata Sons, though a final call has not been taken. If the green signal is given, the company may look at raising a minimum of Rs 4,000 crores via this route,” said one of the sources according to a report by Moneycontrol.com.

Tata considering putting in assets with +1 year track record

“In the InvIT, Tata Power may look at putting in all operational renewable energy assets with a one year plus track record. The solar assets which they acquired from Welspun will be beneficial for this move. A lot of the InvIT’s that are happening now are aimed at deleveraging the balance-sheet,” another source was quoted as saying. Tata Power’s consolidated debt burden stood at Rs 48,506 crores at the end of financial year 2018-19. At the company’s annual general meeting held recently in Mumbai, Tata Sons Chairman N Chandrsekaran had peppered his address with hints about the company’s debt reduction strategy and had said, “On the debt level side, we did close a couple of transactions to sell some of the cross holdings that Tata Power had in some of the Tata Group companies. We continue to find ways in which we can bring debt level further down primarily by selling non-core assets.”