Shriram EPC eyes big growth from renewable energy sector

Chennai: Shriram EPC sees the renewable energy sector, particularly wind and biomass power, as a significant area of growth. The company’s joint venture for manufacturing wind turbine generators is expected to start production in a month’s time, making it a major contributor to its revenues, according to its Managing Director and CEO, Mr T. Shivaraman.

Wind turbine manufacturing and biomass projects would together contribute more than 60 per cent of Shriram EPC’s business within two years. In biomass power, apart from growth in Engineering, Procurement and Construction (EPC) contracts for setting up biomass-based power plants, the company plans to expand its biomass power generation through another joint venture. It is also scouting for investors to grow this business, he told reporters on Thursday.

The projects in the pipeline demand investments of over Rs 1,200 crore for which it is open to inducting more investors, he said.

In the last two years, the Rs 700-crore company has doubled its business each year and these emerging opportunities would help it sustain growth in the coming years. Its order book now stands at over Rs 2,000 crore.

In 2009-10, over 50 per cent of its revenues would be from the wind energy business, 10-15 per cent from biomass power generation projects and the balance from EPC contracts.

Within the EPC business, setting up biomass-based power plants and municipal services — water and wastewater management and treatment contracts — present significant opportunities. As of now, wind energy contributes to about a third of its business and process and metallurgy about 50 per cent of its total revenue.

The wind turbine generator manufacturing unit, a joint venture with Leitwind, Netherlands, will manufacture 1.5 MW class gearless wind turbines at Gummidipoondi to the north of Chennai. It would be an integrated facility except for casting and forging facilities which would be outsourced.

The unit would also start making blades next year. It has a capacity to manufacture 200 turbines a year. At a cost of Rs 10 crore a machine, the business would generate revenues of over Rs 2,000 crore at full capacity from the second year of production. Next year, the unit will produce 80 machines. Nearly half its production would be exported to Europe, Mr Shivaraman said.

This would be in addition to the 250 kw machines that it now sells. Last year, the company sold over 110 turbines and during the current year, the target is 140 machines, he said.

Orient Green Power, a joint venture in equal partnership with Bessemer Ventures, has over 60 MW of wind turbine generators and 16 MW of biomass-based power capacity. Over 240 MW of biomass-based power plants and cogeneration plants are in the pipeline.

The partners have invested over Rs 80 crore in the equity with the total investment at about Rs 220 crore for the projects. These projects are coming up in Tamil Nadu, Andhra Pradesh, Maharashtra, Punjab and Rajasthan.

On EPC contracts in biomass plants, he said the company has completed 10 projects and more than 20 projects totalling over 100 MW are under execution. This joint venture now has over Rs 900 crore worth of orders.