The INR 50,000-crore Shriram Group plans to use Sree Jayajothi Cement Ltd in which it had acquired a majority shareholding as its vehicle to enter conventional energy.

It may be noted that the group had entered into the cement business through Sree Jayajothi. To support the plan, the largely private equity-backed group is also looking at raising around INR 400 crore from PE funds.

Speaking to Business Standard, Mr T Shivaraman MD & CEO of Shriram EPC said one of the major constraints in Sree Jayajothi Cement was power. To address this, the company was planning to set up a power plant with a capacity of 35 to 40 Megawatt.
Mr Shivaraman said that “In a way this will be a foray for the group in the conventional energy space. The group has been taking up EPC contracts for coal based power plants, but this will be the first plant owned and operated by us.”

The Shriram group’s renewable energy arm Orient Green Power Ltd operates biomass, biogas, wind energy and small hydroelectric projects. As of September, 2011, its total portfolio of operating projects included 300 MW of aggregate installed capacity, comprising 250 Mw of wind energy projects and 50 Mw biomass projects. The company has set a target to increase it to 1,000 MW by 2013.

Mr Shivaraman said that to fund the proposed power plant and for working capital requirements, Shriram EPC is planning to raise around 350-400 crore from PE funds. He said that “This is a bad time to bring in strategic partner.”

Besides, the company would now focus on the conventional energy space. He added that “We are not interested in big projects. Our focus will be small projects.”

The proposed INR 220 core to INR 230 crore power plant will be based on imported coal and help the cement manufacturer to increase the capacity utilisation to around 60% from 30% last year.

Source - Business Standard

(www.steelguru.com)