Page 39 - Plastics News March 2018

Business news

Essar Oil & Gas gets saviour in Jain Irrigation subsidiary

GAIL for Rs 4,000 cr CBM project acquires Belgium firm

ssar Oil and Gas Exploration, which has so far been ain Irrigation’s wholly owned subsidiary in Belgium
Efinding it difficult to get customers for its coal-bed Jhas a cquired 100% stake in INNOVAFOOD N. V.
methane (CBM) gas, has found a saviour in GAIL. The Belgiumand its affiliate companies. Jain Irrigation
company controlled by Ruias is set to sign a pact with the Systems said that its subsidiary, Jain Farm Fresh Foods,
public sector firm for selling its CBM at a locked-in price, India (JFFFL), through its multi generation wholly
with assured offtake for 15 years. This would help Essar in owned subsidiary in Belgium has acquired 100% stake in
paying off Rs 4,000 crore investment that it had invested INNOVAFOOD N. V. Belgium and its affiliate companies.
in developing its block at Raniganj. This acquisition aligns with another similar strategic
investment in the UK by JFFFL into a similar business
Essar’s anchor customer for CBM,
Matix Fertilizer, is yet to stabilise covering British Isles 7 years with very impressive
performance till date.
production. And absence of enough
retail customers in the industrial This acquisition will help Jain Farm Fresh Foods to get
belt of Durgapur close to Ranigunj one step closer to the market, have direct presence in
is forcing Essar to burn out one- large food ingredients market, bring cost efficiencies by
fourth of production and so far optimizing supply chain and provide market access and
gas worth Rs 400 crore has been further value addition opportunities in food ingredients
wasted. “The successful price discovery process is going to market directly.No government or regulatory approvals
benefit us significantly. In February, we completed a price are required to complete this transaction. Founded in
discovery process as part of the monetisation policy for CBM year 2000, Innovafood is a leading importer, stockist and
operators. According to it, the current price, linked to Brent distributor of food ingredients and has become one of
crude, is $8.08 per mmbBtu (million British thermal units). the leading player in the dehydrated vegetables, spices
and other food ingredients in Belgium, The Netherlands,
This is much higher than the government APM (administered France and other neighboring countries. Innova food
pricing mechanism) price of $3.21. Once we are connected has developed an unparalleled, high quality and long-
to the grid, anybody can buy it from GAIL,” said Vilas term supply chain and supplier relationships in India,
Tawde, CEO, Essar Oil and Gas Exploration.Selling coal China, USA, EU, Morocco, Indonesia and Uzbekistan.
bed methane, found in layers of coal beneath the surface,
has remained challenging as it is a relatively new form
of alternative energy and Essar Oil and Gas is one among
three producers in the country; others are Great Eastern
Energy owned by YK Modi group having its block nearby and
Reliance Industries, which has producing blocks in Madhya
Pradesh. “While the price discovery has happened for our
Raniganj block only, it will also benefit other CBM developers
in nearby blocks as this will set a benchmark,” Tawde said.
Getting remunerative price and assured offtake is crucial The company also enjoys a very strong and long-term
as Essar has already invested Rs 4,000 crore in its Raniganj customer loyalty in the markets it operates in. It offers
project in drilling 350 wells and related infrastructure a large basket of key food ingredients of dehydrated
including creating a pipeline that carries the gas to the vegetables, herbs, spices and spice extracts, freeze
consumers of Asansol-Durgapur region.The company is dried products, natural food colours, bio products, etc.
currently producing about one million cubic metres of gas with this acquisition
per day and would now put in another 150 wells at a cost Jain Irrigation Systems' consolidated net profit jumped
of Rs 900 crore to double production.“We are expecting to 868.1% to Rs 67.28 crore on 30.8% rise in net sales to Rs
touch revenue of Rs 600 crore in the 2018-19 and expect to 1889.63 crore in Q3 December 2017 over Q3 December
double it in the next two-three years,” he said. 2016.

39 March 2018 Plastics News