The Hindu Business Line : Sago units urge banks to fund bio fuel-based captive plants

COMMERCIAL banks should come forward to fund bio fuel-based captive power plants, which are crucial to modernising sago-manufacturing units in the Salem and Namakkal belts, according to Mr S.R. Rajan, Vice-Chairman, The Sagoserve (The Salem Sago and Starch Manufacturers Service Industrial Cooperative Society Ltd).

While the Ministry of Non-Conventional Energy Sources (MNES) has approved over 20 tapioca-waste based power generation facilities, the projects are pending with the banks for assistance. The commercial banks have supported the units in extending working credit but additional support is needed for modernisation, he said.

Captive power is essential to the mills to ensure quality production of sago and starch using modern equipment. There was a continuous power shortage in the industrial belt, but tapioca harvested from the fields will have to be processed within 24 hours. To meet the quality requirements, the manufacturers need to go in for modern equipment to process the tapioca. They have to mechanise operations, he said.

The starch manufacturers based in Samalkot, Andhra Pradesh, have been able to gain a competitive edge in the market due to modernisation. The banks will have to help the manufacturers duplicate that initiative here, he said.

Mr Rajan was addressing an investor-banker meeting on investment opportunities for financial institutions in cassava processing industry for captive power plants, organised here today by the MNES.

According to Mr R.S.M. Perumal Udayar, Managing Partner, Alaganandha Sago Factory, which is putting up Rs 1.6 crore-biogas facility, the units handling about 50 - 70 tonnes cassava per day have to invest in a 150 HP crusher and a diesel genset as a standby unit because of the power shortage.

According to officials concerned, the cost of power generation from a captive unit would work out to about Rs 2.50 per unit against Rs 5.25 they are paying to the Tamil Nadu Electricity Board. This would not only bring down the units' manufacturing cost but help to upgrade quality of the output.

Dr V. Gomathinayagam, General Manager, Indian Overseas Bank, and Convener, State Level Bankers Committee, Tamil Nadu, said the captive power plants offer a new venue for financial assistance particularly against the backdrop of the reduced areas under agriculture and the failure of monsoon. It is an ideal opportunity for the bankers to increase their indirect agricultural advances since these can be classified as such.

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