Orient Green Power to sell loss-making biomass biz for Rs 275 cr

Orient Green Power Company Limited (OGPL), which is part of the Shriram Group and a renewable energy-based power generation company, is looking to sell its bulk of biomass operations to its promoter company- Shriram Ventures Ltd (SVL Ltd) or its subsidiaries. The enterprise value of the sale is estimated to be around Rs 275 crore. The development comes ahead of company's plan to merge it's wind energy assets with IL&FS Wind Energy Ltd.

OGPL generated 96 megawatts (MW) of biomass energy, out of which 30 MW was already sold to Rajasthan and Maharashtra. The company is now planning to sell another 68 MW to SVL.

T Shivaraman, vice chairman of OGPL and son of Shriram Group founder R Thyagarajan, said that the decision was taken to enhance the value of the company's shareholders.

Biomass operations registered revenues of Rs 78 crore, lower by 24 per cent on a year-on-year basis, due to shut down of some of the power plants, said Shivaraman. It registered a loss before tax of Rs 81 crore in FY17 and has an outstanding debt of around Rs. 193 crore of outstanding debt.

According to the company, almost 50 per cent of OGPL's losses accrued from its biomass business.

The sale of biomass operations will reduce company's outstanding debt by about Rs 250 crore, besides providing the OGPL management with the much-needed support it requires to deleverage its balance sheet. The reduced interest outgo will improve operating performance while enhancing positive cash flows into the wind operations.

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