- 27 Dec 2024
- ICICI Securities
GFCL STRATEGIC TRANSACTIONS FOR POWER BUSINESS RESTRUCTURING AND RENEWABLE ENERGY EXPANSION
News: Gujarat Fluorochemicals has approved the slump sale of its 57 MW captive power plant to IGREL Mahidad Limited, a wholly-owned subsidiary, for ₹200 crore, along with an equity investment of up to ₹40 crore in IGREL mahidad. Additionally, GFCL will acquire a 26% stake in Flurry Wind Energy Private Limited, a promoter-owned company, through an equity investment of ₹200 crore. Also to meet its power needs, the company has entered into Power Purchase Agreements with IGREL (107 MW) and Flurry Wind Energy (350 MW) at ₹4 per unit.
Views: The steps are aimed at simplifying the corporate structure and to secure the power supply for future expansion including the EV venture. That said, the agreement cost of Rs 4 per unit looks higher than the industry average of Rs 2.5 per unit, hence we would wait for further clarification from the management in this regard. Currently power cost accounts for ~18% of the consolidated sales.
Impact: Neutral