Shriram City Union Finance Ltd (SCUF), part of the diversified Shriram group, has decided to sell its non-core assets of windmills situated in Tamil Nadu and Karnataka and its non-conventional energy arm, which produces biomass based power. The move is part of the group?s strategy to focus more on its core business.
The company generates over 12.5 mw under its windmill units (3 in Tamil Nadu and one in Karnataka) and one of the units is supplying to the state electricity board grid on a long-term basis. Similarly, it is also running a biomass unit under Shriram Non-Conventional Energy Ltd, a wholly-owned subsidiary. The biomass unit, based at Pattukottai in Tamil Nadu has a capacity of 7.5 mw and is about to go on stream, said market sources here. In order to focus more on its core business ? financial services ? the company also decided to divest its entire holding of 50 lakh shares (4% stake) in Shriram Sanlam Life Insurance. However, the deal consideration is not yet knwon.
When contacted, R Kannan, managing director, SCUF, told FE: ?We want to focus on our core business only. Though we have been successfully running the non-conventional energy business, due to circumstances and to rest more focus on our core business, the board has taken a decision to sell its wind mills as well as bio-mass assets.?
?We are looking at buyers for both the business and we hope to complete the sale in the next two months,? he said. Both the businesses hold immense potential and expect to fetch us good value. Similarly, the company wants to divest its entire stake of 4% holding in Shriram Sanlam Life Insurance for a good valuation, he added.
Subhasri Sreeram, executive director of the company said the company has 34 different units of windmills with a total capacity of over 12.5 mw. While the mills situated in Karnataka (10 units) selling to the state electricity grid for a 10-year period (since 2005), the mills in Tamil Nadu are selling to different parties. ?We are looking at substantial valuation for our assets in both wind mills and bio-mass, which is under implementation,? she said further.
She said that the company is looking at least four times that of the investments made into Shriram Sanlam Life Insurance for 4% stake. ?We hope to get better valuation based on the future multiples,? she added. Meanwhile, at the board of directors of the company has decided to extend the validity of warrants issued by the company to four private equity investors from 12 months to 18 months. The warrants were granted alongside allotment of equity shares on May 3, 2008. The private equity investors are ICICI Ventures (through IDBI Trusteeship Services Ltd), ChrysCapital (through Van Gogh Ltd), Asiabridge Fund I (TPG Newbridge) and Bessemer Venture Partners.
