Singapore’s Sindicatum Sustainable Resources Group (a global developer, investor and operator of clean energy projects) is acquiring 49 per cent stake in a proposed joint venture that will house co-generation power assets of Delhi-based sugar refinery Simbhaoli Sugars Ltd (SSL).
Under the agreement, SSL will transfer the existing power assets of its co-generation plants at Simbhaoli, Chilwaria and Brijnathpur to Simbhaoli Power Ltd (SPL), the new joint venture, in consideration of cash, shares and other securities. The existing power assets are to be transferred at a value of Rs 196 crore.
Sindicatum, through its subsidiary Sindicatum Captive Energy Singapore Pte Ltd, will acquire 49 per cent of the share capital in SPL. Following the acquisition, SSL and Sindicatum will jointly carry out the power generation business via SPL.
The newly formed JV will be managed by a board of directors which will include representatives from both SLL and Sindicatum. Law firm J. Sagar Associates advised Simbhaoli Sugars in this deal.
Incorporated in 1933, Simbhaoli Sugars operates as an integrated sugar refining company and is also engaged in biomass-based co-generation and export of power to the national grid.
“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 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 Gurmit Singh Mann, chairman and managing director of Simbhaoli Sugars.
The expansion is expected to be complete within 18 months from financial closure and the power plants at Simbhaoli, Chilwaria and Brijnathpur will have the capacity to generate 80 MW of surplus power, exportable to third parties. The total cost of expansion is pegged at Rs 330 crore, to be debt-funded by banks.
Headquartered in Singapore, Sindicatum finances and operates clean energy projects worldwide, and produces sustainable resources from natural products waste. Investors in Sindicatum include three leading US university endowments, five prominent US charitable foundations and global financial institutions representing commodity, banking, insurance and alternative investment sectors.
“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,” said Assad Razzouk, CEO of Sindicatum.
In the backdrop of a growing economy, India’s energy demands are expected to outpace its supply. Key drivers for this imbalance include an expanding middle-class and limited domestic hydrocarbon resources. So far, the government has played a major role in managing the country’s energy infrastructure. However, experts believe that there should be increased reliance on foreign investors and private domestic players to fill the supply void through infrastructure expansion and introduction of renewable energy sources.