Biomass operations registered revenues of Rs 78 crore, lower by 24 per cent on a year-on-year basis, due to shut down of some of the power plants, said Shivaraman. It registered a loss before tax of Rs 81 crore in FY17 and has an outstanding debt of around Rs. 193 crore of outstanding debt.
According to the company, almost 50 per cent of OGPL's losses accrued from its biomass business.
The sale of biomass operations will reduce company's outstanding debt by about Rs 250 crore, besides providing the OGPL management with the much-needed support it requires to deleverage its balance sheet. The reduced interest outgo will improve operating performance while enhancing positive cash flows into the wind operations.
According to S Venkatachalam, managing director and CEO of OGPL, a demerger of operations into a listed company would not create the optimum value in front of shareholders, given the there is a huge pile of accumulated losses over the years.
Merger of wind energy assets with IL&FS
The OGPL-IL&FS merger has reached its final stage as both firms are woking on finalising the venture.
"We have an exclusivity till July-end and hopefully we would be able to finalise the merger before that," said Venkatachalam.
OGPL will merge its wind assets, to the tune of 425 MW, with IL&FS Wind Energy Ltd that currently has the capacity of around 700 MW of energy. The merged entity, under which all the wind assets of both the company will come, will be listed.
The company has got the approval of its private equity (PE) investors, who hold around 22 per cent of the company's stake. SVL, for its part, owns 50 per cent of OGPL's share, while the remaining is held by others.
According to Shivaraman, the merger is part of company's derisking strategy. Out of a total wind portfolio of around 425 MW, around 300 MW is located in Tamil Nadu. IL&FS, on the other hand, has a pan-India presence.
Post-merger, OGPL will have the advantage of not relying on one state. As far as IL&FS is concerned, it will give the company access to Tamil Nadu- one of the largest wind energy generation states.
Besides, with over 1,000 MW of power, ratings are likely to go up leading to a better interest rate.
Venkatachalam hopes that with all these developments, the company will be able to report profits from 2018 onwards.
In 2016-17, the company's loss stood at Rs 112.36 crore, as compared to Rs 168.51 crore in the previous financial year. In 2014-15, OGPL's loss stood at Rs 238.63 crore.