High voltage power lines hang from pylons near an electricity sub-station. (Photographer: Kerim Okten/Bloomberg)

Sunil Mittal Buys Over 6% Stake In CG Power In March

Sunil Bharti Mittal Holdings Pvt. Ltd. has bought nearly 3.8 crore shares, or 6.13 percent stake, of CG Power and Industrial Solutions Ltd. through a series of block deals in March, the electrical equipment maker said in an exchange filing.

The purchases, the filing said, may be a fresh investment as it doesn’t indicate any such prior buys made by the Sunil Mittal-owned investment firm. Based on Thursday’s closing price, the stake may be worth around Rs 150 crore.

A spokesperson for the Bharti Group didn’t comment when asked about the stake purchase.

CG Power is promoted by Gautam Thapar’s Avantha Holdings Ltd. The promoter shareholding in the company has dropped by nearly two thirds to 12.79 percent over last quarter, according to exchange data.

The promoter company, on March 10, intimated the invocation of CG Power’s equity shares by Vistra ITCL (India) Ltd.—the debenture trustee on behalf of BOI AXA Investment Managers and KKR, which are its lenders. Currently, 100 percent of the promoter stake is pledged.

Shares of CG Power have declined over 65 percent from their record high of Rs 120.68 in December 2010.

The shares have been underperforming as CG Power has been unable to sell its loss-making international businesses, said Puneet Gulati, director (equity research) at HSBC. He believes investors have been unhappy with disclosures and the nature of transactions between related parties, especially with the firm’s promoters.

Also read: Will Restructuring At CG Power Ever Be Done?

Morgan Stanley recently discontinued their coverage on the company. Their report cited that any delay in restructuring is adverse for near-term earnings and cash flows.

Venkatesh Balasubramaniam, director at Citigroup (Global Markets), said that even though the company’s performance for the December quarter was decent, advances to group entities and further delays in its Hungarian business divestment remain key concerns.