According to reports, Ushdev International, which recently spun off its wind power business into a subsidiary, is close to finalising purchase of wind power assets, the company told Business Line recently.
BSE-listed Ushdev is into trading in ferrous and non-ferrous metals. The company began investing in wind power in 1997, mainly to gain from the depreciation benefits, and has about 90 MW of capacity.
On April 25, the company decided to de-merge its wind business. Managing Director and Group Chief Financial Officer Ashwin Rathi said the newly-formed subsidiary would raise its capacity from 90 MW now to 350 MW by the end of the current financial year. The entire addition would come from acquisition. Rathi ruled out greenfield expansion this year.
He said that Ushdev is currently doing due diligence for 20 MW of assets of Gupta Coal. It is also looking at some assets of VRL Logistics. In addition, the company is in talks with two other listed companies that have put wind power assets on sale. One of them is a 90 MW wind farm, and the other 87 MW. Rathi did not disclose the names of the companies that own these wind assets.
He said purchasing existing wind farms is attractive, not in the least because they are available at good prices — sometimes for as little as Rs 3.5 crore per MW. In comparison, putting up new capacities would cost upwards of Rs 6 crore per MW.
Rathi said a private equity fund had expressed interest in investing Rs 40 crore (initially). He did not wish to reveal the fund’s name as the shareholders’ agreement is yet to be signed. The promoters will also bring in equity and, therefore, the equity portion of funding for the acquisitions would not be a problem.
As regards debt, he said the selling companies were putting their wind assets on the block mainly because of pressure from their banks to divest their non-core businesses. Those banks are willing to provide debt funds to buyers (such as Ushdev) to acquire the assets.