Nava Bharat in talks with firms to co-develop logistics project near Andhra

Nava Bharat Ventures Limited (NBVL) is in talks with potential partners for developing a new-age logistics and warehousing project in 200 acres of company-owned land near Kakinada in the upcoming Vizag-Chennai Industrial Corridor (VCIC).

The flagship company of multinational industrial group headquartered in Hyderabad, Nava Bharat chose this uncharted area as a part of its business consolidation plan to monetise or leverage the assets that currently remain idle, according to NBVL executive director G R K Prasad.

"We are currently talking to a big company for co-development among other options, involving our land at Dharmavaram where we have 200 acres of unused land and a 20 megawatts (Mw) biomass power plant in another 50 acres. Building a warehousing and distribution facility here would make a perfect sense considering its strategic location that comes with port and highway connectivity to cater to a rich hinterland, "Prasad told Business Standard.

After putting on track the Zambian operations involving a 300 Mw power plant and a coal mine- both owned by the company's step-down subsidiary Maamba Collieries Limited (MCL) last year, Nava Bharat management turned its focus on some of the existing assets, including the Dharmavaram power plant land and appointed one of the big four global consultancy firms to advise it on the way forward.

Of these assets, the company's 2X60 MW-Kharagprasad power plant in Odisha is partly facing the problems. One of the two units was shutdown due to grid connectivity issues on top of lower power demand while the other unit has been generating power for captive use of NBV's Odisha Ferro alloy plant, which largely caters to the requirements of Tata Steel.

"Our Odisha plant is on the block as we want to dispose it off, either just one unit or both of them together, depending on the interest of a future buyer. NBV's decision comes in the light of lower power demand in Odisha impacting the merchant power prices in local market”, Prasad said.

The company is also looking at putting up 65 acres of company-owned land in one of the industrial areas of Hyderabad city for use on similar lines of the Dharmavaram land.

Interestingly, all of NBV's 440 Mw generating capacity between the units operating in Telangana, Andhra Pradesh and Odisha has been in operation only on merchant power basis while a substantial portion of this capacity was consumed in house by the two Ferro alloy units located one each in Odisha and in Telangana state. On the other hand, the company has a 25-year PPA backed by sovereign guarantees for its 300 Mw coal-fired plant in Zambia.

The NBV's consolidated revenues jumped 69 per cent to Rs 24.17 billion in the year 2017-18 after the income from power segment nearly doubled to Rs 15.62 billion mainly on account of Zambian operations, which stood at around $180 million. Ferro alloys business registered a year-on-year (y-o-y) growth of 40 per cent at Rs 9 billion during this period. Its other business include Sugar and mining (coal mine in Zambia).

The company has a net debt of Rs 2.8 billion with regards to its Indian operations while its Zambian subsidiary has a debt of $500 million as on March, 2018.