Hubli-based transport major VRL Logistics Ltd (VRL) has firmed up plans to sell its wind power and cement business units and concentrate on its core business. The company, which operates India’s largest fleet of trucks, is re-entering the media business with a new Kannada newspaper in the pipeline.
“Wind power is not our core business area. We are not happy with the way the state government treats private producers. The utilities are not making timely payment for the power we produce and there are two to three months of outstanding dues always. We are in advanced talks with a few buyers to exit the wind power business shortly,” Vijay Sankeshwar, Chairman, VRL Logistics said.
He said the company has an outstanding payment of Rs 78 crore from the Hubli Electricity Supply Company (Hescom) and an overdue interest payment is to the order of Rs 3 crore. “Compared to a few months ago, the Hescom has improved in its payments. But, every month, they default in their payments and we cannot continue to work on borrowed funds,” he said.
The company has entered into a power purchase agreement with Hescom and sells power at Rs 3.50 per unit.
In 2007, the company had forayed into wind power business and presently operates an installed capacity of 51 Mw from 34 wind turbines (each 1.5 Mw) at Kappat Gudda in Gadag district at an estimated cost of Rs 230 crore. The company had been looking at exiting the business since 2009 and has received two to three proposals, Sankeshwar told Business Standard.
The wind farm has approvals to increase power generation capacity upto 100 Mw whenever required. Suzlon Energy, which supplied the turbines and other equipment for the farm, has been in charge of operation and maintenance of the plant’s 34 wind turbines. Sankeshwar’s family owns 100 per cent equity in the company.
Apart from the wind power business, the VRL Group is also exiting its proposed cement business. It had formed a separate company, VRL Cements Ltd with his son Anand Sankeshwar and other family members. The company had signed a memorandum of understanding with Karnataka government during the global investors’ meet in June 2010 to set up a 2 million tonne per annum cement plant at an investment of Rs 954 crore.
“We have dropped our plan of entering the cement business as it requires huge investment. Acquiring land is a big issue in Karnataka and getting power and water from the government is not easy. The state government told us to acquire land on our own for the project and we found it difficult in the present circumstances. So, we are looking for buyers to sell off VRL Cements Ltd,” Sankeshwar said.
VRL Logistics is likely to register revenue of Rs 1,040 crore for the year ending March 2012, a growth of 21 per cent over the previous year.