IMFA Acquires 26% Stake in EG Urja Strot to Secure 65 MW Hybrid Renewable Power

Indian Metals & Ferro Alloys Ltd (IMFA) has acquired a 26% equity stake in EG Urja Strot Private Limited for an aggregate consideration of approximately ₹110.18 crore. The strategic transaction is designed to secure 65 MW of hybrid renewable power for IMFA’s energy-intensive ferrochrome smelting operations under a captive consumer structure. This move follows the company’s broader initiative to transition toward sustainable energy sources while stabilizing long-term operational costs.

Transaction and Valuation Details

The acquisition was structured as a cash consideration of ₹110.18 crore, executed in one or more tranches to attain the 26% ownership threshold. This investment is not classified as a related party transaction and has been conducted in strict accordance with the captive consumer provisions defined under the Electricity Act, 2003, and the Electricity Rules, 2005. By securing this equity position, IMFA establishes the legal and regulatory framework necessary to wheel power from the project to its industrial facilities.

Hybrid Infrastructure and Technical Specifications

The underlying project by EG Urja Strot is a multi-modal renewable energy facility that integrates solar, wind, and storage technologies to mitigate the inherent intermittency of renewable generation and provide more consistent power.

Project Timeline: The indicative completion and commissioning timeline for the hybrid infrastructure is June 2027.

Power Purchase Agreement (PPA) and Portfolio Impact

In tandem with the equity investment, IMFA has entered into a 29-year Power Purchase Agreement (PPA) with EG Urja Strot. This long-term commitment allows the company to lock in energy rates for nearly three decades, providing a structural hedge against volatile industrial electricity prices and state grid surcharges.

Impact on Energy Portfolio

The addition of this 65 MW supply significantly scales IMFA’s renewable footprint:

• Total Contracted Renewable Capacity: 135 MW (including this 65 MW arrangement and a previously announced 70 MWp deal).
• Energy Transition Roadmap: The previously announced 70 MWp arrangement is expected to commence operations in Q2 FY27.
• Energy Mix Projection: Renewable energy is anticipated to represent nearly 40% of the company’s total energy consumption in the next fiscal year.

Carbon Emission Offset Data

The project contributes to IMFA’s stated sustainability targets of a 50% emissions reduction by 2035 and net-zero status by 2050:

• Annual Offset: About 1.6 lakh tonnes of carbon emissions.
• Total Agreement Offset: Approximately 45 lakh tonnes of carbon emissions over the 29-year tenure.

Corporate Profiles and Context

Indian Metals & Ferro Alloys Ltd (IMFA)

Established in 1961 and headquartered in Bhubaneswar, Odisha, IMFA is India’s leading fully integrated producer of ferrochrome. The company possesses an installed furnace capacity of 289 MVA, capable of producing 434,000 tonnes per annum (tpa). Its operations are supported by captive chrome ore mines in Sukinda and Mahagiri and 204.5 MW of existing captive power generation (including 4.55 MWp of solar). IMFA is currently pursuing a greenfield ferrochrome expansion in Kalinganagar and the construction of a 120 kLD grain-based ethanol plant at its Therubali site.

EG Urja Strot Private Limited

Incorporated on March 6, 2025, EG Urja Strot is a newly formed entity focused on renewable energy generation with its registered office in Hyderabad, Telangana. At the time of the transaction, the entity was in its early stages of development and possessed no prior historical financial track record.

Operational Strategy and Risk Disclosure

The acquisition marks a strategic pivot for IMFA from a traditional power-purchase model to one of owned generation. Binoy Agarwalla, Vice President and Head of the Power Business Unit, stated that the acquisition is “aligned with IMFA’s long-term strategy of strengthening energy security whilst increasing the share of renewable power in our overall energy mix.” Mr. Agarwalla further noted that the arrangement will support operations with “reliably and competitively priced green power over the long term.”

Identified Risks

Despite the strategic benefits, the venture remains subject to several technical and regulatory variables:

• Project Execution: Risks related to commissioning delays or potential cost overruns prior to the June 2027 operational target.
• Resource Variability: Dependence on the availability and consistency of wind and solar resources at the project site.
• Market Volatility Exposure: Because the facility will not be operational for several years, IMFA remains exposed to energy market price fluctuations during the interim construction period through June 2027.
• Evolving Technology: Economic and operational uncertainties regarding the battery energy storage system (BESS) and long-term technology lock-in over a 29-year term.
• Regulatory Environment: Potential shifts in captive power frameworks or state-level renewable energy policies.