Sungarner Energies coming with an IPO to raise Rs 5.31 crore

Sungarner Energies

• Sungarner Energies is coming out with an initial public offering (IPO) of 6,40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 83 per equity share. 
• The issue will open for subscription on August 21, 2023 and will close on August 23, 2023.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 8.30 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Fast Track Finsec.
• Compliance Officer for the issue is Anup Kumar Pandey. 

Profile of the company

The company was founded and promoted by Sumit Tiwari in year 2015, with a motive of providing efficient and low-cost power solutions. The company offers a wide range of power solutions such as Solar Power, UPS, Batteries, Inverters and Solar Panels. It provides solutions like design and engineering services in power sector to its customers.

At the start of its Journey the company was a Design Engineering and Solar EPC company and gradually company also diversified into Manufacturing of Power Electronics and Energy Storage Products. At present, the company is also into manufacturing of Solar Inverters, Online UPS Systems, EV Chargers, and Lead Acid Batteries. It has also obtained WMI code for manufacturing of EV Vehicles (although it has only developed prototype only and has not started full scale manufacturing of EV Vehicles). The company recognized the need for a dedicated R&D facility to innovate new product lines and it established a mid-size in-house R&D facility in 2017 and staffed it with experts who will help the Company is Development of efficient power electronic product such as solar inverter, EV Chargers, harmonic filters, BMS system, Lithium Iron batteries.

The company is also an integrated solar energy solutions provider offering engineering, procurement and construction (EPC) services to its customers. 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. It actively pursues environmental, social and governance initiatives as part of its business operations. Its business is environmentally focused, and it strives towards facilitating a cleaner environment and reduced carbon emissions through the use of its solar PV modules, as well as its EPC contracts, for solar power generation, which is an environment friendly method of power generation. The company caters to engineering projects and products to its various clients in India & overseas. It focuses on reliable, efficient & lowest cost of energy solutions. Its services include design, engineering & implementation of solar Off Grid and On Grid Power Plants. Its in-house R&D has enabled it to develop application centric products.

Proceed is being used for:

• Meeting working capital requirements of the company
• Meeting general corporate purposes
• Meeting the issue expenses

Industry overview

Solar power is a fast-developing industry in India. The country's solar installed capacity was 63.303 GWAC as of 31 December 2022. Solar power generation in India ranks fourth globally in 2021. The Indian Government had an initial target of 20 GW capacity for 2022, which was achieved four years ahead of schedule. In 2015 the target was raised to 100 GW of solar capacity (including 40 GW from rooftop solar) by 2022, targeting an investment of $100 billion. India has established nearly 42 solar parks to make land available to the promoters of solar plants. Rooftop solar power accounts for 2.1 GW in 2018, of which 70% is industrial or commercial. In addition to its large-scale grid-connected solar photovoltaic (PV) initiative, India is developing off-grid solar power for local energy needs. Solar products have increasingly helped to meet rural needs; by the end of 2015 just under one million solar lanterns were sold in the country, reducing the need for kerosene. That year, 118,700 solar home lighting systems were installed and 46,655 solar street lighting installations were provided under a national programme; just over 1.4 million (1.4 million) solar cookers were distributed in India.

With about 300 clear and sunny days in a year, the calculated solar energy incidence on India's land area is about 5 quadrillion kilowatt-hours (kWh) per year (or 5 EWh/yr). The solar energy available in a single year exceeds the possible energy output of all of the fossil fuel energy reserves in India. The daily average solar-power-plant generation capacity in India is 0.30 kWh per m2 of used land area, equivalent to 1,400-1,800 peak (rated) capacity operating hours in a year with available, commercially-proven technology.

As of November 2021, manufacturing capacity of solar cells and solar modules in India was 4.3 GW and 18 GW, respectively. Nearly 80 per cent of solar-panel's weight is flat glass. 100-150 tons of flat glass is used to manufacture a MW of solar panels. Low-iron flat or float glass is manufactured from soda ash and iron-free silica. Soda-ash manufacturing from common salt is an energy-intensive process unless it is extracted from soda lakes or glasswort cultivation in alkali soil. To increase installation of photovoltaic solar-power plants, the production of flat glass and its raw materials must expand commensurately to eliminate supply constraints or future imports. The Ministry of New and Renewable Energy (MNRE), India, has issued a memorandum to ensure the quality of solar cells and solar modules. Compliance with the requisite specifications will grant manufacturers and their specific products an entry in the ALMM (Approved List of Models and Manufacturers.) Indian manufacturers are gradually enhancing the production capacity of monocrystalline silicon PERC cells to supply better performing and enduring solar cells to local market.

Pros and strengths

Cordial relationships with suppliers: The company has cordial relationship with its suppliers for supply of materials, which provides it with the competitive advantage of effective and timely sourcing of raw materials. The company effective sourcing of materials ensures timely delivery of its products to its customers, thereby enhancing the value provided to its customers.

Quality assurance and standards: The company has the quality in its process and products. It is committed to deliver the good quality product in proper manner at all steps from manufacturing to dispatch. Its dedicated internal quality control team ensures the compliance with good standard practices. The company gave prime focus to providing quality material to its customers and follows high quality standards.  

Experienced management team: The company’s management team includes professionals with experience in the Solar Power Industry and Battery industry as well as finance and marketing functions. Its Promoter Sumit Tiwari brings his entrepreneurial vision and leadership which has been instrumental in growing and sustaining its business operations. The company’s management team is growth oriented and has ability to manage growth in rapidly changing business environment and delivery of high-quality materials at sustainable cost. 

Risks and concerns

Maximum revenue comes from Solar Inverter and batteries business: A major portion of its business revenue is derived from the sale of solar inverter and batteries. The solar power storage market is still evolving and is also seeing changes in the technology. If there is a disruption in the form of new technology in the solar inverter or battery industry then it may lead to disruption in the business if the company is unable to adapt to the new technology in a timely manner or if the demand for solar inverter and batteries does not grow faster enough or it takes longer to reach higher volumes than it anticipates, its revenue may disrupt and thereby its business, operational and financial results may be adversely affected.

No long term contracts with suppliers: There are various raw materials which is essential for manufacturing of Solar inverters and batteries, which is supplied through short term contracts. The company procures all the raw material on need basis, after considering quotations from different suppliers, quality of raw material and other relevant factors. Its business largely depends on the availability of raw material and any shortage of it may adversely affect its financial condition and business operations. If it fails to procure good quality raw material, it may not be able to maintain its production and its business operations and financial results may be adversely affected. 

Present promoters are first generation entrepreneurs: The company’s present promoters are first generation entrepreneurs. Their experience in managing and being instrumental in the growth of the company is limited to the extent of their knowledge and experience and it cannot assure that this will not affect its business growth.

Outlook

Sungarner Energies is engaged in the business of manufacturing Solar Inverters, Online UPS Systems, EV Chargers, and Lead Acid Batteries. It started as a Design Engineering and Solar EPC company and gradually diversified into Manufacturing Power Electronics and Energy Storage Products. The company produces lead acid batteries of varying capacities in the range from 12 Volts 40 ampere-hours to 12 volts 300 ampere-hours. On the concern side, the company derives its significant amount of revenue form the manufacturing Solar Inverter and batteries. Any fall in demand of Solar Inverter and batteries may adversely affect its business operations. Moreover, the company does not have long term contracts with its suppliers and therefore, there may be potential unavailability of raw materials in future which may adversely affect its business operations.  

The company is coming out with an IPO of 6,40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 83 per equity share to mobilize Rs 5.31 crore. On performance front, the company has reported 121.31% rise in total income at Rs 1765.33 lakh as in FY23 compared to Rs 797.66 lakh in FY22. The company’s revenue increased from the last year primarily due to increase export business and expansion of retail business. The restated profit after tax for the year ended March 31, 2023, stood at Rs 74.31 lakh whereas in Financial Year 2021-22 it stood at Rs 57.50 lakh representing an increase by 29.23%. Meanwhile, the company intends to invest in developing and enhancing recognition of its brand through brand building efforts, communication and promotional initiatives such as participation in industry events, public relations and investor relations efforts. This will help it to maintain and improve its reach. The company’s branding exercise will enhance the recall value and trust in the minds of its customers and will help in increasing demand for its products. Going forward, the company is now working to expand its retail and export business in 8 States and 7 Countries in next financial year. It is continuously focusing to R&D to provide efficient and latest technology products to its Retail and B2B Customers, e.g., Lithium-Ion batteries, EV Chargers, Solar Air Conditioners etc.