Aditya Birla Nuvo enters solar power business

P R Sanjai
Mint
10 July 2015

Kumar Mangalam Birla-controlled Aditya Birla Nuvo Ltd has decided to bid for solar power projects, starting with Telangana.

The $4-billion company said in a filing to the BSE on Thursday that its board had approved participation in the bidding process for upcoming central, state and private-sector solar power projects.

"With the renewed focus of the Indian government on clean energy and in line with the vision of the company to invest in promising sectors, the company is planning a foray in the solar power business. The board has authorized and approved the formation of special purpose vehicles (SPVs), or subsidiaries, by the company and will evaluate induction of investor(s) in the SPVs and subsidiaries, if required," said Aditya Birla Nuvo.

Aditya Birla Nuvo is a part of the Aditya Birla Group, a $40-billion Indian multinational company that operates in 36 countries across six continents.

The move comes at a time when the government is pursuing an ambitious target to generate 175,000 megawatts (MW) of green energy by 2022. Of the total 100,000MW of solar power capacity planned, 20,000MW will come from solar parks and 40,000MW each from roof-top and distributed generation projects. The government plans to set up 25 such solar parks. India has around 300 days of sunshine per year.

On Tuesday, Japanese telecom and Internet company SoftBank Corp. said it will set up a 20 gigawatt (GW) solar power plant in Andhra Pradesh. SoftBank, along with Bharti Enterprises Ltd and Taiwan's Foxconn Technology Co. Ltd, last month proposed to invest at least $20 billion in solar energy projects in India through a joint venture, SBG Cleantech.

The Gautam Adani-controlled Adani Group has also started acquiring land to set up a solar park in Tamil Nadu, tipped to be among the world's largest, with an outlay of Rs 4,536 crore.

An Aditya Birla Nuvo spokeswoman declined to comment.

The proposed entry into the power sector comes eight years after the group exited the power generation business when it sold two proposed 1,000MW projects and liquidated another one soon after it had completed first-stage work, including land acquisition and environmental clearances. Shares of Aditya Birla Nuvo shed 0.18% to close at Rs 1,881.50 on Thursday on the BSE. The Sensex declined 0.41%. Harish H.V., a partner at consulting firm Grant Thornton India Llp, said that a;lternative energy is a potentially lucrative business opportunity for large corporations.

"Only deep-pocketed players can stay on a sustainable basis in solar power. And Aditya Birla is one of such deep-pocketed corporations," Harish said.

India needs as much as $200 billion to meet its target of installing 100,000MW of solar power capacity and 60,000MW of wind power capacity by 2022.

The National Democratic Alliance (NDA) government, which has made boosting power generation a priority, is looking to supply adequate power at affordable prices. The aim is to double electricity generation to two trillion units by 2019.