Godawari plans foray into thermal power biz

Firm to set up coal-based plant in Jharkhand or Chhattisgarh.

Godawari Power and Ispat (GPIL), an integrated steel manufacturer based in Chhattisgarh, is mulling foray into commercial power generation with projects in Chhattisgarh or Jharkhand with capacities ranging between 300 to 1,000 mw with coal and coal rejects as fuel.

A consortium led by GPIL has been allocated four coal blocks at Nakia and Madanpur in Chhattisgarh with 243 million tonnes of total reserves, of which, GPIL's share is 63 million tonnes. Of this, 40-50 per cent will be wastage such as coal ash and gases during coal processing.

GPIL was planning to optimise its coal mines with coal rejects-fired power plants as part of its backward integration expansions, said sources familiar with the development. GPIL would start mining by 2009 and set up power generation facilities by then, added sources.

"Our board of directors is yet to consider or finalise any plan and, now, we are concentrating only on the existing expansion plans to increase our operating margins. We may enter into commercial power business in future since our businesses are closely associated with power generation," said Dinesh Gandhi, director, finance.

GPIL is a mid-sized integrated steel player producing sponge iron, steel billets, steel wires, wire rods and ferro alloys and generates captive power from waste gases produced at its steel manufacturing facilities.

GPIL currently has 53 mw of captive power consumption, which includes a 25 mw captive power plant commissioned in the first half of 2007-08. Of this, 11 mw is produced using byproducts of sponge iron.

According to sources, B L Agarwal, managing director of GPIL, in his personal capacity has picked up 25 per cent stake in Maruti Clean Coal and Power, a company floated in Chhattisgarh to set up a 270 mw coal-fired power plant with an investment of Rs 1,000 crore. However, GPIL has not firmed up any fuel linkages for this project, sources said.

GPIL is setting up a coal washery unit and a 0.6 mega tonnes per annum (mtpa) pelletisation plant with an overall capital expenditure of Rs 230 crore. This expansion would reduce the raw material cost helping increase operating margins up to 40 per cent.

With captive iron ore and coal mines ready for raw material supply by 2009, the company could enter into areas such as power production in a big way, said sources.