Renewable energy-based power generator Orient Green Power Company Ltd (OGPL) on Friday said its Board of Directors has approved a sale of bulk of its bio-mass business for Rs 275 crore.
In a statement here, the company said that the debt-laden and loss-making business will be sold to the promoter company SVL Ltd or its subsidiaries.
OGPL, a listed company, had made an application in May 2016 to the Madras High Court for demerger of the biomass business into a separate listed entity. The case is currently pending.
Meanwhile, the company has agreed to sell its 20 MW cogeneration plant in Kolhapur, Maharashtra, to the host sugar mill as already approved by the board.
“A 10MW plant in Rajasthan is also in the process of being divested. Upon completion of these transactions, the biomass capacity will reduce to 68 MW,” the company said.
In view of the accumulated losses and the reduced size of the operations, it was felt that demerger of biomass operations into a listed entity with limited growth potential would not create optimum value for shareholders.
As a result, the board has approved the sale of biomass operations to the promoter company or its subsidiaries.
This transaction will not include the cogeneration plant at Kolhapur and biomass plant in Rajasthan which are being sold to the third parties.
Last fiscal the biomass operations registered revenues of Rs 78 crore and registered a loss before tax of Rs 81 crore. The biomass operations have around Rs 193 crore of outstanding debt, the company said.
According to S. Venkatachalam, Managing Director, the sale of biomass operations would unshackle the company’s wind energy business and also unlock value to the shareholders.