Captive Power Generation

Installation of Windmill

By way of backward integration, during the year 2004-2005, the company installed an Induction Furnace for the manufacture of Mild Steel Ingots, at a cost of around Rs.6 crores. The Induction Furnace helps the company produce 30,000 tonnes of Mild Steel Ingots per annum and reduces Input Costs that gives enormous value-addition.

However, the furnace utilizes 3,80,00,000 units of power per annum. To meet this power consumption the company is installing 8 wind turbines, with a capacity of 1.5 MW each, that will produce wind energy of 3,82,00,000 units of power. The Wind Turbines will be purchased from M/s G E Wind Energy, Germany at a total cost of around Rs.73 crores. By way of private placements, after getting required approvals, the company has raised capital of Rs.30 crores by issuing 50,00,000 equity shares of Rs.10 each at a premium of Rs.50 per share. To meet the rest of the expenditure of the Power Project the company has taken term loans from the banks. The project is under implementation and the economies are expected to start accruing benefits from the second half of the year 2005-2006.

Economies of the Scheme

Currently the company pays Rs.4.67 per unit of consumption to the State Electricity Board. With the windmill, the cost of production of one unit of power will be less than Re.1, which will be a saving of Rs.3 per unit. Thus the company will have a net saving of almost Rs.11 crores per annum. The company expects to pay the entire cost of the windmills in seven years and since the windmills have a utility period of 20-25 years, the eighth years onwards they will cease to be a liability. Due to such tremendous cost reduction the power generation will prove to be extremely beneficial for the company.

Caring for the environment

One of the integral parts of the management philosophy of Surana Industries is to be eco-efficient. The company consciously takes measures to set new standards in sustainable development. Surana Industries is keen on mastering pollution and waste through technology.

There is a regular evaluation of internal processes to enhance the eco-friendliness of its products and operations. Relevant investment is made to upgrade facilities with the aim of saving energy and reducing pollutants.

The company, recognizing the need for generating power of its own utilities, set up windmills, which are highly eco-friendly.

With the setting up of wind mill projects Surana Industries Limited, in the near future, will also trade in the carbon credits, which are certificates, issued by United Nations Framework Convention On Climate Change (UNFCCC) to the countries that reduce their GHG emissions, which otherwise causes the depletion of the atmosphere's ozone layer, leading to global warming. Surplus credit (collected by overshooting the emission reduction target) can be sold in the market. One credit is equivalent to one tonne of CO2 emission reduced. The concept of 'carbon credit trading' seeks to encourage countries to reduce their GHG emissions, as it rewards those countries that meet their targets and provides financial incentives to the others to do so as soon as possible.

It is indeed a prime concern for Surana Industries Ltd., to evolve eco-friendly processes to sustain a cleaner and greener environment.

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