Agni Green Power coming with an IPO to raise Rs 5.25 crore

Agni Green Power

• Agni Green Power is coming out with an initial public offering (IPO) of 52,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 10 per equity share.
  
• The issue will open on July 20, 2022 and will close on July 22, 2022.
  
• The shares will be listed on NSE Emerge Platform.
  
• The share is priced 1 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Finshore Management Services.
  
• Compliance Officer for the issue is Avishek Kumar Sinha.
  

Profile of the company

Agni Green Power (AGNI) is founded and promoted by Kolkata based Kanak Mukhopadhyay in the year 1995 with a motive to takeover Agni Electronics, an existing profit-making partnership firm engaged in the business of manufacturing solar powered batteries and lighting systems. The company is in the business of execution of turn-key Solar PV Power Plant projects, including Design, Engineering, Supply, Installation & Commissioning (I&C) and Maintenance, for both Stand-alone and Grid Connected PV Systems from the conceptualization to completion stages.

The company is an integrated solar energy solutions provider offering engineering, procurement and construction (EPC) services, and operations and maintenance (O&M) services to its customers. It also manufacture Solar Power Conditioning Unit, Solar Inverter (Hybrid & Grid Connected), Solar Maximum Power Point Tracking (MPPT) Charger, Remote Monitoring and Diagnostic System, Solar Photovoltaic Junction Box, Control Panel, Digital DC Energy Meter, Solar Adapter and Solar Pump Controller etc.

It has also expanded its footprints through four branch offices in Chhattisgarh, Assam, Mizoram and Tripura. Its key customers mainly include reputed Government organisations. It provides high quality professional solutions, design and engineering services to its customers. Its highly skilled professionals and dedicated team are ever ready to deliver their efficient services. Agni provides technical expertise in the most efficient and cost-effective way, helping to ensure the highest degree of reliability and availability of the project. Having achieved certain degree of expertise after successfully executing various projects, it has an extremely experienced and diverse set of professionally trained and qualified engineers having versed ability in tackling and providing solutions to its customers and capability to handle all requirements and installations even at the highest scale and magnitude.

Proceed is being used for:

• Meeting working capital requirements.
  
• Meeting issue expenses.
  
• General corporate purposes.
  

Industry Overview

The 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. 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 an 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 plans to establish renewable energy capacity of 523 GW (including 73 GW from Hydro) by 2030. As of January 2022, India’s installed renewable energy capacity stood at 152.36 GW, representing 38.56% of the overall installed power capacity. 975.60 MW of renewable energy capacity was added in January 2022. Power generation from renewable energy sources stood at 13.15 billion units (BU) in January 2022, up from 11.51 BU in January 2021. 

The country is targeting about 450 Gigawatt (GW) of installed renewable energy capacity by 2030 - about 280 GW (over 60%) is expected from solar. The renewable energy capacity addition stood at 8.2 GW for the first eight months of FY22 against 3.4 GW for the first eight months of FY21. ICRA expects renewable energy capacity addition of 12.5 GW in FY22 and 16 GW in FY23. Solar power installed capacity has increased by more than 18 times from 2.63 GW in March 2014 to 49.3 GW in at the end of 2021. In FY22, till December 2021, India has added 7.4 GW of solar power capacity, up 335% from 1.73 GW in the previous year. Off-grid solar power is growing at a fast pace in India, with sales of 329,000 off-grid solar products in the first half of 2021. With a potential capacity of 363 GW and with policies focused on the renewable energy sector, Northern India is expected to become the hub for renewable energy in India.  

Pros and strengths

Organizational stability along with management expertise: The company’s group has an established track record of over 26 years which indicates the company’s ability to weather economic and business cycles and competent promoters have over a decade of relevant experience. This indicates its ability to maintain business viability and steer the business though operational hurdles. Its promoters are the guiding force behind the operational and financial decision of the company. Its promoters are responsible for the entire business operations of the company along with an experienced team of professional who assist them. This indicates its ability to maintain business viability and steer the business though operational hurdles.

Smooth flow of operations: The company has maintained good relationship with its major customers. It is successful in building a strong client base for its business. Its existing relationships help it to get repeat business from its customers. This has helped it to maintain a long-term working relationship with its customers and improve its customer retention strategy. Its existing relationship with its clients represents a competitive advantage in gaining new clients and increasing its business.

Well-defined organizational structure: The company has a qualified and experienced management that has decision making powers. It is expected to benefit from the management’s ability to ensure smooth flow of operations. The company is managed by a team of competent personnel having knowledge of core aspects of its Business. It has an experienced management team having vast experience in the industry. Its senior management has pioneered its growth and fostered a culture of innovation, entrepreneurship and teamwork within its organization. A motivated and empowered employee base is key to its competitive advantage. Its personnel policies are aimed towards recruiting talented employees and facilitating their integration into its organization and encouraging the development of their skills and expertise.

Risks and concerns

Face competition: The market for the company’s products is competitive on account of existence of both the organized and unorganized players. Competition occurs generally on the key attributes such as quality of products, pricing and timely delivery. Some of its competitors have longer industry experience and greater financial, technical and other resources, which may enable them to adopt faster in changing market scenario and remain competitive. Moreover, the unorganized sector can offer their products at highly competitive prices which may not be matched by it and consequently affect its volume of sales and growth prospects. Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition.

High working capital requirements: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards debtors, inventories, security deposits and cash and cash equivalents. It has been sanctioned financing facilities from the State Bank of India (including Fund and Non-Fund based limits of TL, WCTL, BG, etc.). Further, it has availed unsecured loans from various Banks/Financial Institutions. Its inability to maintain sufficient cash flow, credit facility and other sources of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations. Further, it has high outstanding amount due from its debtors which may result in a high risk in case of non-payment by these debtors. In case of any such defaults from its debtors, it may affect its business operations and financials.

Depend on third party vendors for Solar Panels and other components: The success of the company’s existing and planned operations will depend on, among other things, its ability to source sufficient amounts of Solar Panels and other components at competitive prices for carrying out its EPC contracts. For the procurement of Solar Panels and other components, it is heavily dependent on external suppliers with which it does not have any formal long-term arrangements. Further, the availability and prices of such items can fluctuate due to factors beyond its control. While it estimate the demand for the panels and other components and accordingly plan its procurement volumes for its operations accordingly, any error in its estimate could result in surplus stock, which may not be installed in a timely manner. Further, any decline in the quality of such items or delay in delivery of items by such parties, may adversely affect its business, results of operations, cash flows and financial condition.

Outlook

Agni Green Power is engaged in the business of executing turn-key solar PV power plant projects. The company has two lines of business, including solar power plant designing, engineering, supply, procurement, and construction, installation and commissioning (I&C), and maintenance services and Manufacturing, Assembling of Solar Lighting Systems and other Solar Products. The company has a footprint through four branch offices in Chhattisgarh, Assam, Mizoram and Tripura. It also manufacture Solar Home Lighting Systems, Solar Street Lighting System, Solar Power Conditioning Unit, Solar Inverter (Hybrid & Grid Connected), Solar Maximum Power Point Tracking (MPPT) Charger, Remote Monitoring and Diagnostic System, Solar Photovoltaic Junction Box, Control Panel, Digital DC Energy Meter, Solar Adapter and Solar Pump Controller etc. The company’s Leadership team consists of its promoters who have several decades of experience in the field of solar energy. It is having a professional managed team to execute its projects having vast techno-commercial knowledge and experience in the field of EPC. On the concern side, the company’s business is highly regulated and it requires a number of licenses, approvals, registrations, consents and permits to operate its business in India. Besides, the company’s business is affected by conditions in the solar power market and industry. The solar power market and industry may from time-to-time experience oversupply. 

The company is coming out with a maiden IPO of 52,50,000 equity shares of Rs 10 each at a fixed price of Rs 10 per share to mobilize around Rs 5.25 crore. On performance front, during the FY 2020-21 the revenue from operation and other income of the Company has been increased to Rs 3526.79 lakh as against Rs 2324.05 lakh in the FY 2019-20 representing an increase of 51.75% from last year. It has earned profit of Rs 10.56 lakh in FY 2020-21 as against profit of Rs 10.25 lakh in the FY 2019-20. The company intends to strengthen its product development effort by leveraging skills of its employees which will help to increase the sales of the company and retain customers. Also, it plans to leverage its existing brands, which have good recall with customers to introduce a wider range of services. It plans to segmentize the market into business as well as influencers levels thereby reach to the need of each customer profile.