Suzuki to acquire 26% stake in NDDB’s bio-gas venture

There is also a provision in the deal whereby Suzuki can gradually increase their equity in the company to 49 per cent. “Suzuki got interested in our bio-gas plants, because they want to focus on sustainability of vehicles through CBG and compressed natural gas (CNG). They believe that both CBG and CNG are the best solution for environmentally friendly vehicles. They also conducted some test and found that the compressed bio-gas produced from (cow or cattle) dung is much better than bio gas from other sources for the longevity of the vehicle and the performance of their engine. This is an in-house study that they have conducted,” Meenesh Shah, Chairman, NDDB, told businessline in an exclusive interaction at NDDB headquarters at Anand.

Suzuki R&D Center India Pvt Ltd (SRDI), a wholly-owned subsidiary of Suzuki Motor Corporation, entered into an agreement with NDDB to invest in its bio-gas subsidiary NDDB Mirda Ltd. “As of now, Suzuki will invest to acquire 26 per cent equity in NDDB Mirda Ltd and the remaining 74 per cent will remain with NDDB. This equity transaction will be at par. We have thought of ₹300 crore equity capital. However, we will begin with an initial investment of ₹34 crore, wherein Suzuki will invest ₹8.84 crore, while remaining ₹25.16 crore will be invested. This will be increased gradually as per the requirements,” he said.

Suzuki had earlier sought 49 per cent equity in the NDDB Mirda Ltd, but the Government of India allowed the company to take up 26 per cent. There is also a provision in the deal, whereby Suzuki can gradually increase their equity in the company to 49 per cent. “Initially Suzuki approached NDDB and we involved Banas Dairy and an MoU was signed so that faster work could be done by us together in this domain. Suzuki wanted to tap NDDB’s rural network for setting up multiple CBG production centres in the villages of Gujarat where Maruti Suzuki Eeco vehicles ply in large numbers. Initially, to support the CBG plant developed by Banas Dairy, four new plants were proposed to be built by Suzuki through their CSR initiative. The model was that NDDB will set up the CBG plants, Banas Dairy will operate the plant and Suzuki will provide the entire funding. Going forward, both Banas and Suzuki will share the profits,” Shah said.

Per the MoU inked between Banas Dairy, Suzuki and NDDB in September 2023, four dung-based CBG plants were proposed to be set up in Dhanera, Vadgam, Diyodhar, Deesa and Tharad districts of Banaskantha district. Currently work on setting up the four CBG plants in Banaskantha district of Gujarat are in progress. “After Banas Dairy, among milk producers unions in Gujarat, Sabar Dairy, Dudhsagar Dairy and Panchmahal Dairy want to follow suit and set up CBG plants. We have convinced Suzuki to provide CSR funds for the same,” the NDDB chairman said, adding that Suzuki after investing in Mirda will be able to go beyond using CSR funds in developing CBG plants in India.

The NDDB Chairman felt that the “mandatory” blending of CNG, as proposed by the Government of India, will open up the CBG sector in India...In order to promote the production and consumption of CBG in the country, the National Biofuels Coordination Committee (NBCC) in November 2023, approved, the introduction of phase wise mandatory blending of CBG in CNG (Transport) & PNG (Domestic) segments of the CGD sector. CBG Blending Obligation (CBO) will be voluntary till FY24-25 and mandatory blending obligation would start from FY 2025-26. CBO shall be kept as 1 per cent, 3 per cent and 4 per cent of total CNG/PNG consumption for FY 2025-26, 2026-27 and 2027-28, respectively. From 2028-29 onwards, CBO will be 5 per cent.