Contract with Power Trading Corporation - 28 Mar 2005

Kanoria Chemicals signs unique Power Purchase Agreement with Power Trading Corporation

PTC signs India's first Agreement with a captive power producer
to pave way for efficient utilisation of surplus power produced in captive power plants
Kanoria Chemicals & Industries Limited (KCI), one of the leading Indian manufacturers of chemical intermediates, today signed a unique Power Purchase Agreement with Power Trading Corporation (PTC). Under this Agreement, KCI will supply 10 MW surplus power from coal-based thermal power plant in its integrated Chlor-alkali manufacturing facility in Renukoot, Uttar Pradesh.

In a first of its kind Agreement, KCI will sell its surplus power to PTC, which in turn, will wheel / evacuate the power to deficient, but revenue yielding locations. This will not only result in efficient utilization of surplus power generated, but also add a new revenue stream for KCI. In addition, the contract has the flexibility to allow KCI to continue to aggressively grow its own captive requirements in the future.

KCI is currently midway through its twin complementary Rs. 180 crores expansion projects in Renukoot. While the company's power generating capability will double to 50 MW, from existing 25 MW, a state-of-the-art environment friendly Membrane Cell Technology based Chlor-Alkali plant with a 110 Tons per day capacity will help the company add to its caustic soda manufacturing facility and also strategically de-risk its business amidst rapid technological developments and ensure enhanced profitability.

The additional Caustic Soda production facility will consume about half the power generated by the new power plant and balance surplus power will be sold to Power Trading Corporation Limited.
Announcing the landmark agreement, Mr. Tantra Narayan Thakur, Chairman & Managing Director, Power trading Corporation, said, "For the first time ever, we have made a foray into the captive power producer's market with a smaller-quantum shorter-duration power contract with this unique Power Purchase Agreement with Kanoria Chemicals & Industries Limited, a leading chemical manufacturing company. This contract is expected to become a structural model not only for power-intensive chemical manufacturing industries, but also for other captive power plants. I am sure that a successful implementation of this unique Agreement will pave the way for many more such agreements and go a long way in optimally utilizing the power being produced in the country."

Speaking on the occasion, Mr. R.V. Kanoria, Chairman & Managing Director, Kanoria Chemicals & Industries Limited (KCI), said, "As part of our growth strategy to de-risk our business and to ensure enhanced profitability, we are delighted to enter into this unique agreement with Power Trading Corporation. Our expansion projects will double our power generation capacity and will enable us to meet power requirement for the new Chlor-Alkali capacity and still generate surplus power which will be sold through PTC. This will be an additional revenue stream for the company while providing us the flexibility of utilising this surplus as per our increased requirement over a period of time."