‘Investments might have no direct impact on company’s profitability’

In a bid to reduce its dependence on fossil fuel, FMCG major ITC Ltd plans to invest Rs 100 crore in renewables over the next two years.

Renewable energy, which currently accounts for about 38 per cent of ITC’s total consumption, is estimated to meet up to 50 per cent of its total energy requirement in the next five years.

The company has installed close to 70 MW of wind power projects across India and a 90 tonne-per-hour biomass fire boiler at a total investment of approximately Rs 400 crore.

Use across units

According to a senior company official, ITC’s paperboards unit at Bhadrachalam (Andhra Pradesh) and Kovai (Tamil Nadu) use biomass, while its factories at Bangalore and Pune and hotels — ITC Windsor (Bangalore), ITC Gardenia (Bangalore), ITC Rajputana (Jaipur), ITC Maratha (Mumbai) and ITC Grand Chola (Chennai) — use wind power either completely or partially.

ITC is also in the process of assessing its energy requirements across other units. “We are in the process of identifying how best we can make use of renewable energy,” the official said. The cost incurred for installing one MW of wind energy works out to be close to Rs 16 crore, as compared with Rs 4 crore for conventional energy.

Cost dynamics

“Though capital expenditure in installing non-conventional energy sources is higher, it will turn cost-effective in the long run as prices of fossil fuels are expected to move up,” he explained.

In 2011-12, the company spent nearly Rs 450 crore on power and fuel, compared with Rs 420 crore in 2010-11.

ITC, however, refused to divulge details on the cost benefits likely to accrue through the renewable energy projects.

According to V. Srinivasan, research analyst, FMCG, Angel Broking, ITC’s investments in the renewable energy sector is a corporate social responsibility activity.

“Investments in renewable energy might not have any direct impact on its profitability,” he said.

shobha.roy@thehindu.co.in

abhishek.l@thehindu.co.in

(This article was published on September 7, 2012)
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