Viviana Power Tech coming with an IPO to raise Rs 8.80 crore

Viviana Power Tech

• Viviana Power Tech is coming out with an initial public offering (IPO) of 1600000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 55 per equity share.
  
• The issue will open on September 05, 2022 and will close on September 08, 2022.
  
• The shares will be listed on NSE Emerge Platform.
  
• The share is priced 5.50 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Beeline Capital Advisors.
  
• Compliance Officer for the issue is Hiral Indravadan Bhatt.
  

Profile of the company

The company is engaged in the business of Power transmission, Distribution and Industrial EPC space projects (Engineering, Procurement and construction). It provides wide range of services such as Power Transmission, EHV substation, Testing and Commissioning of sub-station and Transmission, Power Distribution Network Establishment, Underground Cable laying, Upgradation and modification of existing power system. It also undertakes turnkey jobs for Supply, Civil, Erection, Testing & Commissioning of all types of Electrical system.

The company deals with state government power utilities, private power entities and Renewable energy developers. Preferentially, company opts for EPC projects. The company bags project work from government utilities through open bidding process and from private power entities and renewable energy developers by way of open bidding or preferential basis in accordance with company’s merit and performance. The company has set business module to suit operational needs. Business operations mainly comprises of two main tasks: Supply and service. For performing these tasks, various sequential activities are performed. It has to deploy quality manpower and developed resources. The company owns adequate machineries but for specific requirements of machineries, it has to avail services on hire basis. At site, the company sets up office and store facilities as per project requirement and deploy project team and hire labours on daily basis as per the site requirement.

Proceed is being used for:

• Meeting working capital requirement.
  
• General corporate purpose.
  
• Meeting issue expenses.
  

Industry overview

Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy. India's power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020. India is the only country among the G20 nations that is on track to achieve the targets under the Paris Agreement.

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India's focus on attaining 'Power for all' has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and manpower). India is the third-largest producer and second-largest consumer of electricity worldwide, with an installed power capacity of 395.07 GW, as of January 2022. As of January 2022, India's installed renewable energy capacity stood at 152.36 GW, representing 38.56% of the overall installed power capacity. Solar energy is estimated to contribute 50.30 GW, followed by 40.1 GW from wind power, 10.17 GW from biomass and 46.51 GW from hydropower. 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.

Pros and strengths

Existing client relationship: 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-trained employee base: The company 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. The company 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.

Quality assurance: The company is an ISO 9001:2015 certified organization for Quality Management System, ISO 14001:2015 for Environmental Management System and OHSAS 45001:2018 for Occupational Health and Safety Management System. It will continue to maintain quality of its existing services to cater to various customers in the market. It endeavors to maintain the quality of its service, and follow strict procedures to ensure timely delivery and competitive prices. The company intends to strengthen its development effort by leveraging skills of its employees which will help to increase the sales of the Company and retain customers.

Risks and concerns

Rely on third-party contractors: The company relies on third-party contractors and its employees for the development, construction and operation of its projects as well as other business operations. While the company maintains a diversified set of vendors, it remain subject to the risk that the third-party contractors will not perform their obligations. If the third-party contractors do not perform their obligations or if they deliver any components that have a manufacturing defect or do not comply with the specified quality standards and technical specifications, it may have to enter into new contracts with other contractors at a higher cost or suffer schedule disruptions. Changing a contractor may incur additional costs in finding a replacement service provider or experience significant delays.

Require certain approvals and licenses: The company is governed by various laws and regulations for its business and operations. It is required, and will continue to be required, to obtain and hold relevant licenses, approvals and permits at state and central government levels for doing its business. The approvals, licenses, registrations and permits obtained by it may contain conditions, some of which could be onerous. Additionally, it will need to apply for renewal of certain approvals, licenses, registrations and permits, such as contract labour license for some of its Projects which are expired or need to be updated. While it has obtained a significant number of approvals, licenses, registrations and permits from the relevant authorities. There can be no assurance that the relevant authority will issue an approval or renew expired approvals within the applicable time period or at all.

Significant ongoing funding requirements: The company’s major fund based financial assistance has been sanctioned by the bank, i.e., HDFC Bank on the security of assets. The company is dependent on the bank for its Working Capital requirement and any default under such arrangement with such lender may create problem for operation of the company, which may affect the financial stability of the company. At the same time this may result into difficulty in arranging for funds for re-payment and may also affect the financial position of the Company. If the company is unable in the future to generate sufficient cash flow from operations or borrow the necessary capital to fund its future capital expenditures, it will be forced to limit its growth. In addition, it may not be able to service its existing customers or to acquire new customers. The inability to raise additional capital on acceptable terms could have effect on its business, results of operations and financial condition.

Outlook

Incorporated in 2014, Viviana Power Tech is engaged in the business of Power Transmission, Distribution and Industrial EPC space projects (Engineering, Procurement and construction). The company provide a wide range of services such as Power Transmission, EHV substation, Testing and Commissioning of sub-station and Transmission, Power Distribution Network Establishment, Underground Cable laying, Upgradation and modification of existing power system. It deals with state government power utilities, private power entities and Renewable energy developers. Preferentially, company opts for EPC projects. Company bags project work from government utilities through open bidding process and from private power entities and renewable energy developers by way of open bidding or preferential basis in accordance with company’s merit and performance. It is an ISO 9001:2015 certified organization for Quality Management System, ISO 14001:2015 for Environmental Management System and OHSAS 45001:2018 for Occupational Health and Safety Management System. On the concern side, the company’s operating results may fluctuate or adversely vary from past performances in the future due to a number of factors, many of which are beyond the company’s control. Besides, unavailability or shortage of such a pool of workmen or any strikes, work stoppages, increased wage demands by workmen or changes in regulations governing contractual labour may have an adverse impact on the company’s cash flows and results of operations.

The company is coming out with a maiden IPO of 1600000 equity shares of Rs 10 each at a fixed price of Rs 55 per share to mobilize around Rs 8.80 crore. On performance front, revenue from operations had increased by 12.30% from Rs 2006.38 lakh in Fiscal 2020 to Rs 2253.21 lakh in Fiscal 2021. The change was primarily due to increase in sales. The company reported a net profit of Rs 98.62 lakh in Fiscal 2021 as compared to a net profit of Rs 120.80 lakh in Fiscal 2020. Meanwhile, the company plans to continue to expand the scope and range of current services provided to its existing customers by continuing to build its expertise and extending its capabilities. It also intends to continue to build on its inclusive culture to ensure its employees remain engaged and committed to delivering exceptional service.