See power production from wind plant in 6-mths: Sumeet Ind

Shankar Lal Somani, CMD, Sumeet Industries in an interview to CNBC-TV18 spoke about the outlook of the company going forward.The company will be setting up 10.5 megawatt (MW) wind power plant at the cost of Rs 71.5 crore, of which IDBI Bank has sanctioned Rs 57.75 crore. The plant is expected to start producing power in the coming 4-6 months.The new plant will produce around 25 percent of the company’s total power requirement. Also the power generated from the plant will be exempted from tax for ten years, said Somani.Below is the transcript of Shankar Lal Somani's interview with Ekta Batra and Reema Tendulkar on CNBC-TV18.Ekta: Can you apprise us of this wind power plant that you are setting up, how much are you putting into it and how is it going to be funded and how is it going to help the company even in terms of your margins?A: At present in India, power cost is increasing daily. Every year 5-7 percent power cost is increasing. So we have decided to put 10.5 megawatt wind power plant with a cost of Rs 77.51 crore. This plant will start within four-six months; it will start producing the power. For this, we had got sanction from IDBI Bank of Rs 57.75 crore. So this is a very good project. For few years, there will be some interest and installment but after that, we will get power at Rs 1.30 paisa for 25 years. So I feel this is a very good and environment friendly project.Reema: Will you get any tax breaks on this project?A: Yes. For wind mill, government had already announced 10 years income tax exemption.Reema: What will be the tax benefit that you will enjoy because of this project?A: For 10 years -- if we are producing Rs 20 crore power per annum. That full power is tax free that means Rs 200 crore tax free -- no income tax on Rs 200 crore power in 10 years.Ekta: How do you think it is going to possibly affect your entire loan book, do you think that this additional loan that you have taken would be easily payable over a period of time and if so how, what would your total loan book be then?A: For a windmill project, loan and installments doesn’t need to be paid by the company. First we will start our windmill and then our power will be used. So this is not burden on the company.Reema: This power that you generate will be used for your own captive consumption and if yes, how will it reduce your fuel cost or how much can your margins go up by?A: Our power consumption is 12 megawatt and this unit will produce only 25 percent of the total requirement. So this Rs 2.7 crore unit we will produce and approximately Rs 7-8 crore will be extra profit from first year itself.