Tata Industries, a holding company of the Tata Group, recently surprised observers when one of its directors, Kishore Chaukar, was given a seat on the board of Pune-based Praj Industries, before any money exchanged hands.
Praj Industries makes bio-fuel plant and machinery, and after Chaukar’s admission onto its board, it is widely believed that Tatas will buy a stake in the Rs 650-crore company, which is one of the most promising innovators from India.
Tatas’ interest in Praj stems from the fact that the company is a global leader in supplying machines to build both ethanol and bio-fuel (cellulosic ethanol from waste) plants. Ethanol demand is driven by the need for energy security, government mandates, tax credits and growing concerns of global warming.
An equity tie-up with Praj will also give Tatas access to technology to build plants that can produce ethanol from molasses and waste. The companies could also collaborate in the biotechnology space — Tatas in healthcare biotechnology and Praj in industrial biotech.
The practice of old industrial companies buying into renewable energy companies is becoming a global phenomenon. With oil reserves in the Persian gulf and other regions poised to soon run dry, many global energy majors such as British Petroleum (BP) and Shell are exploring ways to reduce dependence on fossil fuels.
Tatas clearly want to be in the action. Another group company, Tata Chemicals, is quietly finalising plans to build a sweet sorghum-based ethanol plant. And Tata Power is expanding its joint venture with BP to make solar panels and erect wind mills that will produce 100 MW electricity every year. Tata Motors, group chairman Ratan Tata’s pet company, is also planning to make trucks that run on alternative fuels such as compressed natural gas to meet ever-tightening emission norms.
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