Insolation Energy
Insolation Energy is coming out with a 100% book building; initial public offering (IPO) of 61,56,000 Equity Shares of face value of Rs 10 each in a price band Rs 36-38 per equity share.
The issue will open for subscription on September 26, 2022 and will close on September 29, 2022.
The shares will be listed on SME Platform of BSE.
The face value of the share is Rs 10 and is priced 3.60 times of its face value on the lower side and 3.80 times on the higher side.
Book running lead manager to the issue is Holani Consultants.
Compliance Officer for the issue is Snigdha Khandelwal.
Profile of the company
The company is engaged in the business of manufacturing solar panels and modules of high efficiency of various sizes as per the demand in the market from its fully automatic a state-of-the-art 200 MW (Rated Installed Capacity) SPV Module manufacturing unit located at Jaipur, spread in more than 60,000 Sq. ft area with latest machinery and stringent quality assurance process which delivers quality solar PV module. In addition to the manufacture of solar PV modules, the company also trades in Solar Power Conditioning Unit (PCU) which uses solar energy and power from the grid to charge batteries and tall tabular Lead Acid Batteries which are used to store energy generated from the solar panels. It is also an integrated solar energy solutions provider offering engineering, procurement and construction (EPC) services to its customers.
The company has built a strong brand reputation for its solar PV modules manufactured on a fully automatic state-of-art manufacturing unit and sold under the brand name of ‘INA’ along with a successful track record of developing, engineering and constructing. It strives to deliver reliable solar solutions through innovative products, and it achieves this majorly through its specialized high efficiency PV module manufacturing line and comprehensive EPC solutions. The company adheres to some of the industry’s best quality product accreditations. The company has obtained certifications such as ISO 9001:2015, ISO 45001:2018, ISO 14001:2015, BIS-IS:14286 etc.
The company’s solar PV modules are currently manufactured using both polycrystalline and Mono-PERC crystalline cell technology. Its portfolio of solar energy products consists of the following solar PV modules which includes bifacial (glass - to - Transparent back sheet modules) and are differentiated on the basis of solar PV module technology and type as well as cell size: (i) polycrystalline modules; and (ii) monocrystalline passivated emitter and rear cell (Mono PERC) modules. The company is in the business of solar PV module technologies for more than last 5 years, during which time it has developed strong engineering capabilities in producing high efficiency PV modules.
Proceed is being used for:
Industry overview
Indian renewable energy sector is the fourth most attractive renewable energy market in the world. India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020. Rajasthan, Gujarat, Andhra Pradesh, Karnataka, Telangana and Tamil Nadu are the renewable energy hubs in India. Installed renewable power generation capacity has gained pace over the past few years, posting a CAGR of 17.33% between FY16-20. With the increased support of Government and improved economics, the sector has become attractive from investors perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role. The government is aiming to achieve 227 GW of renewable energy capacity (including 114 GW of solar capacity addition and 67 GW of wind power capacity) by 2022, more than its 175 GW target as per the Paris Agreement. The government plans to establish renewable energy capacity of 523 GW (including 73 GW from Hydro) by 2030.
The Indian solar energy market is expected to record a CAGR of more than 8% during the forecast period. The COVID-19 outbreak did not significantly impact the Indian solar energy market, as growth was witnessed in the solar PV installed capacity in 2020 compared to 2019. The cumulative growth in electricity generation by solar energy sources also accelerated in 2020. Major factors driving the Indian solar energy market are the declining cost of solar power technology, the flexibility of these systems, and a greener method of power generation. However, the solar energy market is restrained by issues like T&D losses (Transmission & Distribution) and unpredictability in the continuity of power supply. The solar PV segment is expected to dominate the Indian solar energy market during the forecast period, as PVs are significantly cheaper than other solar technologies and include a simplified installation procedure. India has an abundance of solar irradiance and receives solar energy throughout the year, creating many opportunities to exploit solar energy from the sunniest sites in the country, especially Rajasthan, Gujarat, and Andhra Pradesh. This factor, clubbed with foreign investment and extensive R&D projects to improve the technology, provides ample opportunities for the growth of the Indian solar energy market.
Pros and strengths
Strong relationships with customers, employees and other key stakeholders: The company offers a varied range of customized solutions for solar power projects. It adopts a consultative approach to its customers’ solar energy needs, which enables it to provide customized solutions to meet their requirements. Its network connects its customers to the employees and other key stakeholders and allows its customers to reduce the number of service providers they need to engage with, thus saving them time and cost, while also providing enhanced supply chain visibility. Managing complete supply chain for its customers gives it a competitive advantage as it is able to select and optimize solutions for its customers efficiently and at competitive prices. It often receives repeat orders from its customers. As part of its network, it maintains cordial relationships with its employees and other key stakeholders in the industry, such as, a diversified group of global and local suppliers of modules and other raw materials as they are critical to the success of its supply chain.
Dedicated design and engineering team: The company’s operations are supported by a competent and sizable design and engineering team that are responsible for designing innovative and cost-effective solutions with an aim to increase the performance ratio of solar power projects. All of its design and engineering team is based in Jaipur, Rajasthan, which provides it a cost advantage over its competitors. Its design and engineering team is engaged on its projects from the pre-bid stage through commissioning. At the pre-bid stage, its design and engineering team, evaluate and provide innovative design solutions for each potential solar power project and once it win the bids, they work with its project execution team to implement the designs and overcome challenges through design solutions.
Ability to provide EPC as supplemental value addition: The company is primarily a high efficiency solar PV module manufacturing company that have developed a diversified product and service portfolio catering to solar energy solutions, and as a result it is able to provide integrated EPC services. It provides these services primarily for its own manufactured PV modules, as a value-added offering. It has experience in executing EPC projects for solar plants and have a few projects which have been executed or are under execution at various stages of construction. Its dedicated in-house team of designers and engineers manage site survey, planning, basic and detailed design, technical evaluation of vendors and assess safety requirements. It is focused on providing ongoing technical support across the complete value chain of the project in a cost-effective manner.
Risks and concerns
Do not have long?term contracts with suppliers: The availability of solar PV cells and various raw materials, essential for manufacturing solar PV modules, is through short term supply contracts. The company purchases all these raw materials on a need basis primarily through the spot market purchase mechanism and seek to source such raw materials from diverse suppliers. In the past few years, there has been a growing demand for solar power products necessitating continuing expansion of the full solar value chain industry. This growing demand and global supply chains to meet such demand, however, has been negatively impacted by the COVID-19 pandemic. In the future, there may be industry-wide fluctuations in the supply of raw materials due to the growing demand for solar PV modules. I may, from time to time, experience late delivery from suppliers and may have to purchase raw materials at a higher price or with lower conversion efficiencies / specifications, which in turn may result in reduced revenues per solar PV module.
Derive significant amount of revenue from only one product: The company is in the business of manufacturing solar PV modules using polycrystalline and monocrystalline cell technology with wattages ranging between 340Wp and 450Wp with efficiencies, which is a measure of the amount of sunlight (irradiation) that falls on the surface of a solar panel and is converted into electricity (Efficiencies), ranging between 17.45% and 20.35%. For the Fiscal 2022, 2021 and 2020, the revenue from the sale of solar PV modules was Rs 20,734.91 lakh, Rs 14,426.90 lakh, and Rs 8,242.15 lakh, respectively, and which represented 96.30%, 88.68% and 92.87%, respectively, of its revenue from operations in such periods. The company is therefore exposed to the changes in demand for solar PV modules manufactured using polycrystalline and monocrystalline technology which would affect its business, profitability and prospects. On the other hand, some of its competitors may be planning to become vertically integrated from upstream mono/ poly-silicon manufacturing to solar system integration.
Requires significant amounts of working capital: The company’s business requires a significant amount of working capital for smooth functioning. As on March 31, 2022, March 31, 2021 and March 31, 2020 its inventories form 35.81%, 36.70% and 43.59% of its respective total current assets and trade receivables form 45.10%, 24.54% and 30.74% of its respective total current assets. It meet its requirement for working capital majorly through banking facilities, net worth and internal accruals. In future, its inability, if any, to meet its working capital requirements or inability to renew its existing working capital requirements through banking arrangements can adversely impact its business operations and financial position.
Outlook
Incorporated in October 2015 in Jaipur (Rajasthan) India, Insolation Energy (INA) is a national solar energy provider and has set up a state of the art fully automatic solar PV module manufacturing plant at Jaipur. The most modern 100 MW Solar PV Module Manufacturing Unit is conceptualized by promoters and engineers, engaged from best Institute and Industry, having relevant domain expertise in solar panel manufacturing and caters to high-efficiency PV Modules in the range of 40Wp to 465Wp. Portfolio covers both Poly and Mono crystalline modules and new innovative products such as Twin power, Dual glass (Glass to Glass), BIPV, Poly, Mono & Mono PERC. Its solar PV modules are rated highly efficient, provide better generation and offer unique technical advantages across varied applications. In a small span of five years and after successive and intensive trials initially, INA has emerged as a leading solar manufacturer in India, significant contributor in EPC / Solar developer domain and a strong brand committed with a successful track record of developing, engineering, constructing and connecting more than 250 MW+ of solar PV modules. On the concern side, the company’s success depends on the supply and transport of the various materials required to its manufacturing facilities from suppliers and of its finished products from its manufacturing facilities to its customers, which are subject to various uncertainties and risks.
The issue has been offered in a price band of Rs 36-38 per equity share. The aggregate size of the offer is Rs 22.16 crore to Rs 23.39 crore based on lower and upper price band respectively. On performance front, the company’s total revenue has increased by 32.36% to Rs 21,539.13 lakh for financial year 2021-22 from Rs 16,272.92 lakh for financial year 2020-21. The company’s profit after tax increased by 0.36% to Rs 2.48 lakh in FY22 as against Rs 689.72 lakh in FY21. Meanwhile, the company plans to continue focusing on operational and financial efficiency by investing in its design and development team and their engineering efforts. It also focuses on recruiting, training and retaining a talented workforce and offer training and career opportunities. In addition, it continues to focus on its risk assessment matrix and stay updated with new technology. It seeks to continue to work towards the up gradation and modernization of its infrastructure and technology in future as well for sustaining its growth in the subsequent periods.
