Financial Daily from THE HINDU group of publications
Monday, Apr 26, 2004
Alliances & Joint Ventures
Industry & Economy - Non-conventional Energy
Revathi Equipment signs PPA with Rajasthan SEB To set up windmill project
Coimbatore , April 25
THE Coimbatore-based Revathi Equipment Ltd has invested in a windmill project in Rajasthan and entered into a long-term power purchase agreement (PPA) with the Rajasthan State Electricity Board for the sale of wind energy.
The wind energy project is essentially meant to be an investment vehicle intended to achieve better returns on the capital invested. The Rs 12-crore windmill project (four wind producing units) undertaken during the last quarter of fiscal year 2003-04 would also serve as a tax shield.
The company, besides the depreciation benefit associated with wind energy investments, could also claim the 10-year tax holiday for income-tax under Section 80IA allowed for new industrial investment, company sources said.
The company has chosen Rajasthan, a power-starved State, for its windmill project as it offered attractive terms both in the power purchase rate as well as the power purchase agreement (PPA) tenure.
Unlike the State electricity boards in the South whose PPA tenure is said to be below the 10-year period, the company could have a 20-year PPA with Rajasthan.
In its financial working for the just ended 2003-04 fiscal, the company's net sales had fallen by 10 per cent to Rs 45 crore from the previous year's operative income of Rs 50.8 crore due to a relative flat market for mining equipment, though it could manage to maintain its profitability with profit before tax at Rs 16.4 crore, almost at the previous year's PBT of Rs 16.2 crore.
Its net profit for the just ended fiscal had gone up to Rs 11.5 crore, against Rs 4.4 crore in the previous year when the company had to charge Rs 10 crore `non-solicitation' fee or the non-competition fee paid to its erstwhile promoters, Atlas Copco India Ltd, leading to shrinkage of profitability that year.
Revathi Equipment's board, which took the financial results on record in its meeting last week, had also announced 25 per cent dividend for 2003-04.
Last year, the company it had skipped dividend payment for the first time after so many years.
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