Massive Rs 30 Crore Surprise! A Leading Chemical Player Goes All-In on Renewable Energy
Strategic Green Energy Move to Slash Costs and Boost Sustainability!
Chemplast Sanmar Limited (CSL) and its wholly owned subsidiary, Chemplast Cuddalore Vinyls Limited (CCVL), have announced a strategic investment in JSW Green Energy Nine Limited under the Group Captive Power Scheme. This initiative is aimed at securing a long-term supply of green energy while significantly reducing power costs.
Investment Details
CSL and CCVL have entered into a Power Purchase Agreement (PPA) with JSW Green Energy Nine Limited and will acquire equity stakes of 18.46 per cent and 7.81 per cent, respectively. The total investment amounts to Rs 21.38 crores for CSL and Rs 9.05 crores for CCVL. This SPV, incorporated by JSW Neo Energy Limited, will generate renewable power through a solar capacity of 64.9 MW AC and wind capacity of 20 MW in Tamil Nadu.
Strategic Rationale
The acquisition aligns with CSL’s long-term sustainability goals by securing a reliable source of renewable energy. The company expects significant cost savings, given the long-term nature of the agreement. The initiative also supports India’s renewable energy transition and enhances CSL’s ESG (Environmental, Social, and Governance) compliance.
Financial Performance and Market Dynamics
For Q3 FY25, Chemplast Sanmar reported revenue of Rs 1,058 crores, marking a 19 per cent YoY growth. EBITDA improved to Rs 32 crores from a loss of Rs 7 crores in Q2 FY24, while net loss reduced to Rs 49 crores from Rs 89 crores a year ago. Specialty Chemicals emerged as a key growth driver, nearly doubling its revenue to Rs 377 crores.
However, challenges persist due to pricing pressures from dumping of Suspension PVC from China and Paste PVC from the EU. The company is actively pursuing anti-dumping measures to counter these challenges and stabilize margins.
Future Outlook
With growing domestic demand, Chemplast Sanmar is optimistic about long-term revenue growth. The Custom Manufactured Chemicals division is expected to contribute significantly, targeting Rs 1,100 crores by FY27 with EBITDA margins stabilizing at 20-25 per cent.
This investment in green energy marks a crucial step in Chemplast Sanmar’s strategy to balance sustainability with financial prudence, positioning itself for robust growth in the evolving market landscape.
Disclaimer: The article is for informational purposes only and not investment advice.