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DLF gets shareholders approval to sell wind energy business

DLF said Friday, its shareholders have approved a proposal to sell the company’s wind energy business. Shareholders approved the resolution through a postal ballot, company said in an exchange filing. Of the 144.59 crore votes polled, 99.98% were in favour of the resolution, it said. On 18 June, the company had sought shareholders’ approval for the purpose through a postal ballot.

We had reported earlier that DLF was seeking shareholder approval to sell 161.2MW wind farms in Gujarat and Karnataka and the sale price was likely to be around Rs 9 billion.

The windmill division posted revenue of Rs 90.88 crore in FY11 and an operational and maintenance cost of Rs 17.61 crore thus generating an operating profit of Rs 73.27 crore. The company has PPAs with Gujarat Urja Vikas Nigam Limited (GUVNL) and Hubli Electricity Supply Company (HESCOM)  to sell power. The two wind farms for sale are of 150 MW and 11.2 MW  capacity and located at Kutch (Gujarat) and Gadag (Karnataka) respectively.

Edelweiss has put an enterprise value (market capitalization + debt) of Rs 780 crore for DLF’s power asset, which is 8 times EBIDTA (earnings before depreciation interest and tax) of Rs 91.1 crore that it is likely to achieve in FY14, two years from now. In other words if an investor puts in Rs 780 crore today, it will take him 10 years to reach operational breakeven, in a sector which has lost all its charm.

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