Winsol Engineers coming with IPO to raise upto Rs 23.36 crore

Winsol Engineers

• Winsol Engineers is coming out with initial public offering (IPO) of 31,15,200 shares of Rs 10 each in a price band Rs 71-75 per equity share. 
• The issue will open for subscription on May 6, 2024 and will close on May 9, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 7.10 times of its face value on the lower side and 7.50 times on the higher side.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Rishibha Kasat. 

Profile of the company

Winsol Engineers is an integrated engineering, procurement, construction and commissioning company providing Balance of Plant (BoP) Solutions for both Wind and Solar power generation companies. Its core services for BoP Solutions includes Foundation work, Substation Civil and Electrical work, Right of Way services, cabling to substation and Grid, and Miscellaneous work. Its clients are in the renewable energy industry who prefers the company for the BoP solutions due to its historic track record of timely completion of project, its expertise and extensive experience in the business and cost efficiency. In addition to its core BoP Solutions, the company also provides Operation and Maintenance services for Plant handling and monitoring. It is ISO-9001-2015, ISO-14001-2015 & ISO-45001-2018 certified company demonstrating its execution capabilities in quality.

Balance of Plant solutions for Wind and Solar projects refers to all the components of a power generation facility excluding the main generating equipment. This includes structures, equipment, and systems necessary for the plant's operation. This can involve the design, procurement, installation, and commissioning of the balance of plant systems necessary for the overall functioning of the facility. The company is responsible for delivering the entire project, including balance of plant components but excluding the main generating equipment (such as turbines or generators). Under Operation & Maintenance vertical, the company provides support to site operations for optimized performance. Its scope of service includes support site operations for minimizing the down time of turbines, SCADA Monitoring, Inspection and reporting on abnormalities, Supervisor Scheduled maintenance and periodical replacements and participate in all audits, preparation for the reports including manpower supply for the mentioned services.

Proceed is being used for:

• Working capital requirements
• General corporate purpose

Industry overview

India's energy demand is expected to increase more than that of any other country in the coming decades due to its sheer size and enormous potential for growth and development. Therefore, most of this new energy demand must be met by low-carbon, renewable sources. India's announcement India that it intends to achieve net zero carbon emissions by 2070 and to meet 50% of its electricity needs from renewable sources by 2030 marks a historic point in the global effort to combat climate change.

India was ranked fourth in wind power capacity and solar power capacity, and fourth in renewable energy installed capacity, as of 2021. Installed renewable power generation capacity has increased at a fast pace over the past few years, posting a CAGR of 15.4% between FY16 and FY23. India has 125.15 Gigawatt (GW) of renewable energy capacity in FY23. India is the market with the fastest growth in renewable electricity, and by 2026, new capacity additions are expected to double. With the increased support of the Government and improved economics, the sector has become attractive from an investor’s perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 Terawatt hour (TWh) by 2040, renewable energy is set to play an important role.

India has set a target to reduce the carbon intensity of the nation’s economy by less than 45% by the end of the decade, achieve 50% cumulative electric power installed by 2030 from renewables, and achieve net-zero carbon emissions by 2070. Low-carbon technologies could create a market worth up to $80 billion in India by 2030. India‘s target is to produce five million tonnes of green hydrogen by 2030. The Green Hydrogen target is set at India’s electrolyzer manufacturing capacity is projected to reach 8 GW per year by 2025. The cumulative value of the green hydrogen market in India could reach $8 Billion by 2030 and India will require at least 50 GW of electrolyzers or more to ramp up hydrogen production.

Pros and strengths

End-to-end execution capabilities: Its management team ensures efficient and rapid construction and completion of its projects, its quality assurance team ensures the quality construction of its projects, and its procurement team works with vendors who have the scale to deliver and meet its requirements to procure construction materials and equipment. It places significant emphasis on cost management and rigorously monitors its projects to ensure that they are completed within committed timelines and budgeted amounts. As a result of its end-to-end execution capabilities and in-house resources, it is able to complete its projects at competitive cost as well as create value for future projects through its efficient supply chain, which enables the company to benefit from economies of scale.

Optimal utilization of resources: The Company constantly endeavours to improve its execution process, capabilities, skill up gradation of employees, modernization of plant and machineries to optimize the utilization of resources. It regularly analyses its material procurement policy and project execution process to de?bottle neck the grey areas and take corrective measures for smooth and efficient working thereby putting resources to optimal use.

Long-standing relationships with clients:  Its reputation for completing projects in a timely manner and its focus on quality has helped the company build strong relationships with its clients. It has completed or is currently undertaking projects for a number of reputed clients.

Risks and concerns

Dependent on a few suppliers: Its top ten suppliers contribute 56.07%, 57.41%, 65.96% and 74.60% of its total purchase for the period ended on December 31, 2023 and for the financial year ended on March 31, 2023, 2022 and 2021, respectively based on restated financial statement. It cannot assures that it will be able to get the same quantum and quality of supplies, or any supplies at all, and the loss of supplies from one or more of them may adversely affect its purchases of stock and ultimately its revenue and results of operations.

Significant working capital requirements: Its business is working capital intensive. The successful operation of its business heavily relies on significant working capital, which is essential for various aspects, including financing project operations, inventory management, and the purchase of raw materials and may continue to so in future also. However, changes in credit terms and payment delays can adversely impact on its working capital, resulting in lower cash flows and increased funding requirements. Inadequate financing of its working capital needs may arise due to several factors, such as delays in disbursements under financing arrangements, higher interest rates, increased insurance costs, or borrowing and lending restrictions. Such circumstances could have a material adverse effect on its overall business, financial condition, and prospects.

Dependent on few numbers of customers for sales: Its top ten customers contribute 97.96%, 98.30%, 97.75% and 94.11% of its total revenue for the period ended on December 31, 2023 and for the financial year ended on March 31, 2023, 2022 and 2021, respectively. The Company provides BoP (Balance of Plant) Solutions for both Wind and Solar power generation companies and also provides Operation and Maintenance services for Plant handling and monitoring. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations.

Outlook

Winsol Engineers is engaging in an integrated engineering, procurement, construction and commissioning company. The company provides BoP (Balance of Plant) Solutions for both Wind and Solar power generation companies and also provides Operation and Maintenance services for Plant handling and monitoring. Its core services for BoP Solutions includes Foundation work, Substation Civil and Electrical work, Right of Way services, cabling to substation and Grid, and Miscellaneous work. It is ISO-9001-2015, ISO-14001-2015 & ISO-45001-2018 certified company demonstrating its execution capabilities in quality. On the concern side, it competes with organized players in the industry with better financial position, market share, product ranges, human and other resources. Branding and marketing are the key factors in the industry where larger players are in a better position to market their products. 

The company is coming out with an IPO of 31,15,200 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 71-75 per equity share. The aggregate size of the offer is around Rs 22.12 crore to Rs 23.36 crore based on lower and upper price band respectively. On performance front, the total revenue from operations for the FY 2022-23 was Rs 6538.66 lakh as compared to Rs 6070.19 lakh during the FY 2021-22. Revenue from operations was increased by 7.72% in FY 2022-23. It recorded an increase in its profit for the period from Rs 108.46 lakh in the year ended on March 31, 2022 to Rs 518.07 lakh in the year ended on March 31, 2023. Meanwhile, it intends to continue its focus in enhancing project execution capabilities so as to derive twin benefits of client satisfaction and improvements in operating margins. It will constantly endeavour to leverage its operating skills through its equipment and project management tools to increase productivity and maximize asset utilization in its ongoing projects. It intends to continue its focus on performance and project execution ability in order to maximize its operating margins.