Simbhaoli Sugars Limited (SSL), one of the country’s largest sugar refiners, announced that it has entered into a joint venture with Sindicatum Sustainable Resources Group (“Sindicatum”) a global developer, investor and operator of clean energy projects.
SSL will transfer the existing power assets of the cogeneration plants located within its Simbhaoli, Chilwaria and Brijnathpur complexes to Simbhaoli Power Limited (SPL), the joint venture company, in consideration of cash, shares, and other securities. The existing power assets are to be transferred at a value of Rs 1.96 bn. Sindicatum through its subsidiary, Sindicatum Captive Energy Singapore Pte Limited, will acquire 49% of the share capital in SPL. Following the acquisition, SSL and Sindicatum will, via SPL, jointly carry out the power generation business, the sale to the Utility Companies and the upgrading of the power assets.
SSL established SPL to transfer its power undertakings on a going concern basis. The power plants shall operate in a complete synergy with the sugar operations and power generation based on bagasse and other biomass. The arrangement will be subject to approval of SSL banks as a part of its ongoing business restructuring exercise.
The expansion project involves the enhancement of the power generation capacity from the existing 60MW to 115MW. Following the expansion, which is expected to be completed 18 months from financial closure, the power plants will have the capacity to generate 80MW of surplus power, exportable to third parties. The total cost of the expansion is expected to be Rs 3.3 billion which is being provided by the banking institutions via debt funding. The occurrence of the transaction is subject to achieving the complete financial closing.
“The joint venture will enhance the total power generation capacity of our plants from 60 MW to 115 MW and provide a surplus of 80 MW. The expertise of both JV partners in the power business will contribute towards meeting the renewable energy requirements in the country and the State. The proposed arrangements will also reduce SSL’s dependence on revenues from sugar and will assist us in mitigating the cyclicality of the sugar industry,” said Mr. Gurmit Singh Mann, Chairman and Managing Director, Simbhaoli Sugars.
”We want to build the leading biomass platform in the Indian sugar sector because of the large and predominantly untapped renewable power generation potential it offers. We believe that, by using our financial and human capital we can build a portfolio in excess of 500 MW of bagasse to power projects in India within the next 3-5 years. We are honoured to have partnered with SSL, one of India’s most distinguished companies, the leading producers of high quality refined sugar and operating one of the country’s largest integrated sugar complexes,” said Mr. Assad Razzouk, CEO of Sindicatum.