The initial public offer of ACME Solar Holdings Limited was subscribed a total of 2.89 times. Qualified Institutional Buyers (QIB) subscribed the most by 3.72 times and the Retail Investor category subscribed 3.25 times. Whereas, non-institutional investors (NII) category filled 1.02 times.
Now on November 13, the company's shares will be listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Before the listing, Dainik Frontpage Insights spoke to the company's founder and chairman Manoj Upadhyay and CEO Nikhil Dhingra.
Both of them told that after energy conservation, the company has started the business of energy generation. Profitability in our business has been good. Our profit in EPC (Engineering, Procurement and Construction) business has been 15% and in power sales our profit has been 12%-15%. Along with this, both of them also shared many things related to the company's business. Read the full interview…
Answer: How has been the journey of ACME Solar Holdings so far, how did you start it? What challenges did you face?
Question : Answering this question, Founder Manoj Upadhyay said that I am a man of technology. I started this company in 2003, I invented a power interface unit and face change mechanism. We started with energy conservation.
Both our products became so successful that many telecom companies of the country used them. When it used to cost Rs 15 per minute to make a call, this technology helped a lot in reducing the power cost, due to which the cost of telephone could be reduced. In 2009 we decided to move from energy conservation to energy generation.
At that time the cost of solar was Rs 15 per kilowatt, but then we believed that this is such a technology that it will keep improving every year. Then we decided that we will work in this sector. We formed our entire team and started the journey of energy generation by setting up our first 15 watt project in Gujarat. In 2017, we completed 1 GW and then in 2018 we installed another 1 GW project. We are one of the few solar companies in the country who have 15 years of experience.
ACME Solar Holdings has 15 years of power generation experience. Its IPO was open from 6 November to 8 November.
Question: What is the company's mission and vision?
answer : Our core mission is to produce electrons at a highly optimized cost so that people can adopt green electrons. At the same time, our vision is that we can become a good green energy utility.
Question: Which products does the company manufacture and how many manufacturing facilities are there?
answer : The way NTPC makes thermal power, we make solar power. Apart from this we also provide EPC (Engineering, Procurement and Construction) service. In EPC, we set up big solar plants, in which along with purchasing the land, we also do the work from connectivity to construction. The CEO of the company said that they set up plants for government companies, own them and give them power.
He said that in the current government program of 50 GW every year, we have won very good bids last year. In this we also have to provide hybrid power. In hybrid power, instead of only solar, wind and battery plants are also installed. So that, it produces more energy.
Nikhil Dhingra told that 30% is used on solar. This means that out of 24 hours a day, solar runs for 7-8 hours. If power has to be provided for a longer period, then along with solar, a bind and battery also have to be installed. He said that this will gradually increase the replacement of thermal power and will not depend on thermal power in future.
Question: Who is your primary customer and have you made any plans to increase it?
answer : Our primary customers are Government Solar Energy Corporation of India, National Thermal Power Corporation Limited (NTPC), National Hydroelectric Power Corporation Limited (NHPC) and Satluj Jal Vidyut Nigam (SJVN). Our business comes from purchasing electricity from the government, which we get through bidding. We make preparations in advance to get government projects through bidding.
For bidding, connectivity on National Grid will be required. We have connectivity of about 3300 MW, which we can use for further bidding. Our plan is to get bidding for as many projects as possible.
Question: Can you tell us any product innovations of the company that make you different from others and who are your competitors?
answer : This is a sector where technology changes very quickly. The technology of modules, batteries and inverters changes. Along with this, new methods of planting plants also come up. We have adopted a lot of new technology during construction. Many new things have been adopted including robotic cleaning, which reduces the cost of construction and also reduces the cost of operations.
Along with this, Founder and Chairman Manoj Upadhyay said that our new product will be how we can provide such power by installing solar, wind and battery, which the distribution company can use as per its convenience. Giving an example, he said that power is used differently in the house in the morning, afternoon, evening and night.
We will have a similar product in the future, which will generate power through different technologies as per the household consumption. Our competitor companies include Adani Green Energy, Renew Power and NTPC's subsidiary NTPC Green Energy, which work in the same sector.
Question: How has been the financial performance of the company in the last few years, can you give its summary?
answer : The financial performance of our company has been good. About 550 MW plant has been installed in the last 3 years. At the same time, if we talk about this year, we have installed a big plant of 1200 MW. In the last 3 and a half years, we have increased our 1800 MW capacity to 3600 MW. Our profitability in this has also been good. Our profit is 15% in EPC business and 12%-15% in power sales.
Question: When did you think that IPO should be launched and how will you use the ₹ 2,395 crore raised through fresh issue?
answer : We thought of bringing IPO 9 months ago. When we saw that the government programs have expanded a lot and there seems to be no issue from the demand side for growth, we felt the need for more money to expand the business. Understanding among people regarding this sector has increased a lot and the outlook is also quite positive, due to which our growth path is quite clear.
At the same time, Manoj Upadhyay said that out of the funds raised from the fresh issue, he will pay the debt of some of his subsidiary companies worth Rs 1800 crore. We will use the rest for general corporate purposes. He said that there is no date in the company to be listed.
We have to form one company for each project because the government has a rule that the company with PPA (Power Purchase Agreement) will not do any other work. We, the PPA company, take a debt (loan) against the cash flow of the project because the projects we set up get the power for 25 years. After loan payment, the entire cash flow will be available for our growth, which we will use for our current projects.
Question: How does the OFS of ₹505 crore impact your company, considering that the company will not earn any income from it?
answer : There is an OFS of ₹505 crore which will go to our sponsor company Acme Tech Solutions. This does not affect us in any way because even after this the promoter holding will be close to 84%. Presently our entire stake is with the sponsor company, hence the sponsor will have 84% stake.
OFS will increase the liquidity of the sponsor company, due to which if they have to do any other business then they can do it. Like we are thinking about green hydrogen business and have done some work on it. The sponsor will help for that and will also help in future if needed for this company.
Question: What other projects is your company working on to improve its positive impact on the environment?
answer : Our promoter has just started a new business of green hydrogen, with whose help we had set up a pilot project of green hydrogen in Bikanes. It was very successful, after which we have started work to set up a bigger plant. The green hydrogen sector will also grow significantly in the future.
He said that the hydrogen produced now is entirely made from fossil fuels, which is very bad for the environment. The advantage of green hydrogen is that it is made entirely from renewable sources and its cost is also fixed. There is a lot of scope for it in Europe right now and a very good hydrogen mission has been launched in our country too, which will see a lot of growth in the next 2-3 years.
Question: What kind of returns can your shareholders get in the coming 2-3 years?
answer : In response to this question, the Chairman said that we want our shareholders to get very good returns. We will try our best to run our business very well, which will benefit us as well as our shareholders.
Question: Any special thing related to the company or IPO that you want to share with investors?
answer : It is very important for investors to understand our business model. Our business is a very stable business. Investors can invest for the long term by considering it to be a stable as well as profitable business.
maximum 663 Retail investors could bid for shares
ACME Solar Holdings had fixed the IPO price band at ₹275-₹289. Retail investors could bid for a minimum of one lot i.e. 51 shares. If you apply for 1 lot as per the upper price band of IPO of ₹ 289, then you would have to invest ₹ 14,739.
At the same time, retail investors could apply for a maximum of 13 lots i.e. 663 shares. For this, investors would have to invest ₹ 191,607 as per the upper price band.
This issue was worth ₹2,900 crore
This issue total of ACME Solar Holdings was ₹2,900 crore. For this, the company is issuing 82,871,973 fresh shares worth ₹2,395 crore. Whereas, the existing investors of the company are selling 17,474,049 shares worth ₹ 505 crore through Offer for Sale i.e. OFS.
Graphics Source: VaskarAssets
