Two companies shortlisted for project; states, land parcels identified
The Hinduja Group, with business interests ranging from power and automobiles to financial services, will be entering the solar power sector in India to develop a generation capacity of 1,000 MW, in phases. This is part of the group’s strategy to execute only short-gestation greenfield opportunities in India, and focus more on acquisitions for growth.
Gopichand P Hinduja, co-chairman of the London-based Hinduja Group of Companies, said that becoming a major solar power producer in India was an integral part of the conglomerate’s plan to invest $10 billion in the power and infrastructure space in the country. The solar power generation capacity envisaged by the Hinduja Group could entail total investments of Rs 5,500-6,000 crore.
Sticking to its traditional business philosophy of being the controlling shareholder in a joint venture, the Hinduja Group will hold 51% or more of the equity of a proposed solar power JV, GP Hinduja said.
“We have shortlisted two companies, and now we will have to select one (for the JV),” GP Hinduja said.
“The states and land parcels for the project have been identified.” He didn’t divulge the names of the shortlisted firms.
The group is looking at states like Gujarat, Rajasthan and Andhra Pradesh to set up its solar power generation units. GP Hinduja, who is based in London and was in Mumbai on Monday, said that Shom Hinduja, his brother Ashok P Hinduja’s 23-year-old son, would spearhead the venture. AP Hinduja looks after the conglomerate’s businesses interests in India.
The conglomerate, founded by Parmanand Hinduja, Srichand P Hinduja and GP Hinduja’s father in 1914 as a trading entity, currently earns around 12% of its overall turnover from India. To capitalise on the positive business sentiment and growth prospects of the domestic economy, the group is aiming to double the share of this contribution to around 25%. The group currently has a turnover of over $25 billion.
But the group hasn’t always had it easy in India. For instance, it has been trying to build a power plant in Andhra Pradesh for the last 17 years, but the project is yet to see the light of day. Inordinate delays in securing various approvals and clearances have held up the 1,040 MW project thus far and, just as everything was falling in place, a cyclone that ravaged large parts of the state retarded the pace of work towards commissioning of the project. The power plant is almost ready and the first phase of 520 MW should be commissioned by June, GP Hinduja said. This will be followed by the second phase, which is expected to come on stream by August.
But the challenges that the Hindujas have had to face in implementing greenfield projects in the country appear to have led to a re-think in strategy as far as further growth in India is concerned. “We do not have the patience to wait for another 17 years (for a new project to come up, like the Andhra Pradesh power plant),”GP Hinduja said.
The conglomerate will no longer consider implementing long-gestation, greenfield projects in India, GP Hinduja said. The solar power venture being considered is an exception as it is expected to take six to eight months to commission.
Instead, the focus is going to be on acquisitions of distressed assets, particularly in the power and infrastructure sectors, or building up on existing capacities to cater to industries like defence.
“We are trying to be a part of the defence sector in a big way. We have R&D (research and development) and manufacturing capabilities, and will be happy to provide our services to all foreign companies who may like to partner with us,”GP Hinduja said.
The conglomerate’s flagship company, Ashok Leyland, which makes commercial vehicles, is one of the largest suppliers of vehicles to the Indian armed forces and is part of a consortium — along with Larsen & Toubro and French company Nexter Systems — that is working on a mounted gun system artillery programme for the Indian army.
Capitalising on positives
* The Hinduja Group will hold 51% or more of the equity of a proposed JV. It is looking at states like Gujarat, Rajasthan and Andhra Pradesh to set up the generation units
* The move is part of the group’s strategy to execute only short-gestation greenfield opportunities in India, and focus more on acquisitions for growth
* The group currently earns around 12% of its overall turnover from India. It aims to double the share of this contribution to around 25%