Orient Green Power Ltd., the wind power unit of the Shriram Group of Industries, has dismissed claims it’s up for sale and said it will add capacity for the first time in three years now that it has additional funds in hand. “The worst is behind us,” managing director S Venkatachalam said, denying market speculation that Orient Green was up for sale. The company plans to add 47 MW of capacity to its existing 50.54 MW wind farm at Tadipatri in Andhra Pradesh. Its total wind portfolio currently stands at 429 MW.
Capacity addition was made possible with the infusion of Rs 250 crore of fresh equity in August last year, with about Rs 100 crore from the Edelweiss Group and the remaining from the promoters, Shriram Ventures Ltd. “We need another Rs 320 crore of debt, of which we have tied up Rs 200 crore from banks, while the rest is also being arranged,” said Venkatachalam. Orient Green posted a loss of Rs 22.7 crore in the first quarter of 2016-17, narrowing from losses of Rs 53.38 crore a year earlier and Rs 158.6 crore in the preceding quarter. The company reported a loss of Rs 342.3 crore in 2015-16.
The wind energy producer attributed the losses to ‘backdowns’ in Tamil Nadu, where distribution companies shut off power supply from producers for fear of overloading the grid. About three-quarters of Orient Green’s total wind portfolio is located in Tamil Nadu, with the remaining in Andhra Pradesh. “Our problems in wind energy arose mainly due to the lack of grid availability in Tamil Nadu,” said Venkatachalam. “We have lost around Rs 250 crore due to backdowns. Had our projects been more evenly distributed across the country, we would have suffered much less.”
Backdowns have been a perennial problem for wind energy producers in Tamil Nadu for the past few years. They have petitioned the state electricity regulatory commission and the Supreme Court against the Tamil Nadu Generation and Distribution Corporation, demanding that wind energy should have a ‘must run’ status. “The grid backdown level in 2013-14 was 20%, the next year it was 19% and the year after 23%,” Venkatachalam told analysts at an earnings conference call. “This year so far it has been just 10-11%, which is a major thing as we go forward.”
What made matters worse in 2015 was that it was a low-wind year due to the El Nino phenomenon, which has now blown over. The El Nino can sometimes adversely affect India’s annual monsoon rainfall. “The grid will also be able to take more power with the completion of the 2,000 MW green energy corridor from Kayathar to Sholinganallur, the (state’s) decision to shut down thermal power plants of 2,000 MW for maintenance during the high-wind season, the introduction of scheduling and forecasting (for wind energy) and most importantly, sale of excess power to other states,” Venkatachalam said.
To cope with its losses and high debt, Orient Green has sought restructuring of the debt under the 5:25 scheme introduced by the Reserve Bank of India last year, by which infrastructure loans can be extended up to 25 years with refinancing every five years. Beta Wind, a unit of the company that handles 241 MW of capacity, has run up loans of about Rs 1,000 crore. These had to be repaid by 2023 and have now been rescheduled up to 2033. “Four or five banks in the consortium which is financing us have already agreed and the rest will have done so by the month end,” Venkatachalam said. “Servicing the repayment was straining our system but now the pressure will be much reduced.”