ECOPRENEUR… Sumant Sinha

Blowing in the Wind 

Sumant Sinha Chairman & CEO
RENEW POWER VENTURES

    Sumant Sinha made headlines eight months ago when global PE giant Goldman Sachs committed 1,000 crore to his little-known firm ReNew Power Ventures. The largest PE investment in India’s burgeoning renewable energy sector was all the more remarkable because ReNew had no capacity on the ground when the deal took place. But the plans on paper are impressive: Sinha can set up capacity up to 500 MW ( 2 crore of equity plus 4 crore in bank loans is required to set up 1 MW of wind power) without further equity dilution. Of course, for that investment, Sinha had to part with a controlling stake in his start-up. That didn’t matter much to the 48-year old finance professional-turnedentrepreneur. On the contrary, he says, it saves him from looking around for funds. “It’s extremely difficult to be in the market continuously to raise money,” says Sinha, sitting in his 33rd floor Breach Candy residence in south Mumbai that overlooks the Arabian Sea. Also, the fund-flush situation helps ReNew get good partners, quality people and easier access to bank loans, adds the ex-Citibanker. Sinha, son of former finance minister Yashwant Sinha, has shifted ReNew’s headquarters from Mumbai to New Delhi as, he says, the capital offers an environment that is more conducive to renewable energy and brings him closer to his family. Sinha and his 50-odd colleagues are working overtime to establish ReNew as a quality wind-energy player in the country. He has set up a capacity of 25 MW in Gujarat, and is selling most of it to the state distribution arm and a small quantity to Phillips India. He refrains from forecasting his company’s targets, adding execution is a challenge in India. The company’s website, however, says total capacity will go up to 1 GW by 2015. Although Sinha’s focus is on wind now, he will get into solar, which he thinks is the future. For the time being, though, wind is more mature in India from the technology and regulatory points of view, he adds. Wind is cheaper than solar too, by about 25%. India is the world’s fifth-largest wind power market with an installed capacity of 48 GW. Last year, it added 3,000 MW of wind power, the third-highest addition after China and the US. The production target for 2020 is 102 GW, or 8% of the country’s total electricity demand. Sinha gathered knowledge on the windpower industry when he joined the country’s largest wind-turbine maker Suzlon Energy in 2008. As COO, he observed Suzlon chairman Tulsi Tanti from close quarters. Before that, he experienced the pain and pleasure of working with a start-up—one in which funds were not a constraint—when he headed the Aditya Birla group’s retail foray. “From (chairman Kumar Mangalam) Birla, I learnt how to stay focused on longterm strategy, while Tulsibhai showed me the passion and energy of a first-generation entrepreneur,” recalls Sinha. Sinha joined Suzlon partly because he was lured by green energy; he decided to take the entrepreneurial plunge towards the end of his stint when he foresaw some regulatory changes were in the offing that would help independent power producers (IPPs). In April, the government withdrew accelerated depreciation, paving the way for more participation of IPPs. Accelerated depreciation is an accounting practice that allowed companies to reduce their tax liability by front-loading depreciation of a project up to 80% in the initial years. It was meant to encourage investment in the wind power sector, but ended up as a ploy for many to bring down their tax burden. “Sumant Sinha was an extremely effective COO for our business,” says Suzlon chairman Tulsi Tanti. “When he told me that he wished to begin his own company, I was delighted; for an entrepreneur to have encouraged someone else to become an entrepreneur is extremely fulfilling.” Goldman Sachs, which has two representatives on the ReNew board, has expertise in renewable energy, with worldwide investments of $1.5 billion in the sector. Ankur Sahu, co-head of private equity, Goldman Sachs Asia, says ReNew stands out as an example of Indian entrepreneurial excellence. “We look forward to teaming with the management, both financially and operationally, to help the company become a leader in India’s renewable energy sector,” adds Sahu.

Kausik Datta & Ahona Ghosh ET120809