From bullion trader to food companies, unlikely investors flock to solar sector
NEW DELHI: What is common to food chain Haldiram Foods International (Nagpur), skin care product manufacturer Emami Pvt Ltd, media conglomerate Rajasthan Patrika Pvt Ltd, bullion trader Riddhi Siddhi Bullion Ltd and entrance exam coaching institute Made Easy Education Pvt Ltd?
They all seem to want a share of India’s fledgling solar business.
Tariff bid results announced last week for a little over 310 megawatt (MW) of solar power projects in Madhya Pradesh have thrown up an unusual mix of bidders — at least six food and healthcare firms, two auto companies, two media outfits, dozens of infrastructure firms and commodity traders and six individuals (mainly high net worth individuals or HNIs).
While the auctions received much attention for the lowest-ever solar bid quoted at 5.05 per unit by Canada’s Sky Power South East Asia Holdings, analysts, government officials and company executives told HT that most companies were looking to invest mainly to avail tax incentives.
While real estate companies, including DLF Ltd (which has exited the solar business), Moser Baer and Hindustan Power Projects (promoted respectively by father and son Deepak and Ratul Puri), among others, have always shown interest in the renewables space, others are testing the waters now.
“We have seen a trend (in the past few auctions) of HNIs and other companies bidding primarily to take advantage of accelerated depreciation benefits that the solar policy offers,” said Vaibhav Singh, a senior consultant with PricewaterhouseCoopers India.
“Accelerated depreciation” refers to accounting methods used for tax purposes, which allow greater deductions during the ear- lier years of an asset’s lifespan. In India, investments in solar projects allow accelerated depreciation of 80% of the cost of the asset.
Promoters of several companies, including Delhi-based Made Easy Education and Ramesh Steel, also seconded the view, though each one of them said that they wanted to enter the sector for the long term. “As a group we are very keen on investing in solar, although since we have a mining company, we will look for acceler- ated depreciation in future,” said Soham Mishra, the promoter of Kolkata based One Auto Pvt Ltd.
While Delhi-based Narendra Kumar Khanna won one bid, at least five others participated in their individual capacity. HT could not reach any of these individuals despite repeated attempts.
“Such people invest their surplus money in this area (solar) and save taxes,” said Sanjay Kumar Shukla, MD of MP Power Management Company Ltd.