Shree Krishna Paper Mills Invests ₹3.1 Cr for Solar Power Stake

Shree Krishna Paper Mills Invests ₹3.1 Cr for Solar Power Stake

Shree Krishna Paper Mills & Industries Ltd. (SKPMIL) is investing ₹3.1 crore to acquire a 26.5% stake in Ratan Green Projects One Private Limited (RGPOPL). RGPOPL is developing an 8.5 MW AC / 12 MWp DC solar power project with a 1.3 MWh battery storage system in Rajasthan. The investment will be made in two parts: an initial ₹93 lakh, followed by ₹217 lakh, which depends on the project reaching its Commercial Operation Date (COD). This move aims to secure a long-term captive power supply for SKPMIL’s paper mills.

Why This Matters: Lower Costs and Greener Operations

The paper industry relies heavily on energy, with power and fuel costs making up a large part of production expenses. Securing its own solar power supply can help SKPMIL stabilize these costs and depend less on fluctuating grid electricity prices. This investment also fits a wider industry trend towards renewable energy, helping companies improve sustainability and reduce their carbon footprint.

Energy Costs in the Paper Sector

Energy costs can account for as much as 25% of manufacturing expenses for Indian paper mills. This has historically led many to invest in their own power generation for reliable supply. In recent years, the sector has increasingly turned to renewable energy, especially solar, due to falling costs, government support, and a push for sustainability and cost efficiency. SKPMIL has previously shown commitment to green technology and recycled materials in its operations.

What This Means for Shareholders

Shareholders will gain indirect exposure to a renewable energy asset supplying the company's core operations. SKPMIL can expect more predictable and potentially lower energy costs long-term. Diversifying its energy sources will enhance operational stability and reduce reliance on external providers, supporting the company's sustainability goals.

Key Risks to Watch

Key risks include the second investment tranche being dependent on RGPOPL completing the project and reaching its COD, which could be delayed. Developing and commissioning a new solar project also carries execution risks. While this investment aims to reduce power tariff risks, SKPMIL's overall profitability could still be affected by fluctuating raw material costs.

Industry Peers Embrace Renewables

Many Indian paper mills are increasingly investing in captive power and renewable energy solutions like solar and wind to manage high energy costs and boost sustainability. This trend helps companies gain cost advantages and ensure a reliable power supply.

What to Track Next

Investors will monitor the timely completion of both investment tranches and RGPOPL’s project reaching its Commercial Operation Date (COD). They will also track SKPMIL's actual cost savings and energy stability benefits from the new solar power setup, along with RGPOPL's project development progress.