Published on 6/08/2019 2:44:58 PM | Source: Ventura Securities Ltd

IPO Note - Sterling And Wilson Solar Ltd By Ventura Securities

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The company was incorporated on March 9, 2017 as Rashmika Energy Private Limited. The Promoters of the company are Shapoorji Pallonji and Company Pvt. Ltd (“SPCPL”) and Khurshed Yazdi Daruvala. The Solar EPC Division of Sterling and Wilson Private Limited (“SWPL”) was demerged into the company on April 1, 2017. Thereafter, to reflect the association of the company with the Sterling and Wilson group, the name of the company was changed to Sterling and Wilson Solar Private Limited. 


Business Overview: -

Sterling and Wilson Solar Limited (“SWSL”) is a global pure-play, end-toend solar engineering, procurement and construction (“EPC”) solutions provider. It was the world’s largest solar EPC solutions provider in 2018, based on annual installations of utility-scale photovoltaic (“PV”) systems of more than 5 mega-watt peak (“MWp”), according to IHS Markit. The company provides EPC services primarily for utility-scale solar power projects with a focus on project design and engineering and manages all aspects of project execution from conceptualizing to commissioning. It also provides operations and maintenance (“O&M”) services, including for projects constructed by third-parties. Its customers include leading independent power producers (“IPPs”), developers and equity funds.

The company commenced operations in 2011 as the Solar EPC Division of SWPL and demerged from SWPL with effect from April 1, 2017. Over a span of 7 years, it became the largest solar EPC solutions provider in each of India, Africa and the Middle East, according to IHS Markit in 2018, and currently has a presence across 26 countries. As of March 31, 2019, it had 205 commissioned and contracted solar power projects with an aggregate capacity of 6,870.12 MWp. Its order book, which is the value of solar power projects for which it has entered into definitive EPC contracts minus the revenue already recognized from those projects, was Rs.3,831.58 crore as of March 31, 2019. The company offers a complete range of customized solutions for solar power projects.

The company adopts a consultative approach to its customers’ solar energy needs and capabilities, which enables it to provide customized solutions to meet their requirements. The company follows a “hub-andspoke” business model where it manages the complete supply chain from India, including the design and engineering functions, and engages a few suppliers and third-party subcontractors and procure part of the raw materials for its operations locally in each of its markets, where there is a cost advantage or to comply with local regulations.

The company seeks to leverage this business model to procure products and services solutions for its customers at competitive prices. In Fiscal 2018 and 2019, the revenue from operations outside India accounted for 59.11% and 69.82% of its total revenue from operations, respectively. The company often receives repeat orders from its customers and as of March 31, 2019, customers in India and outside India for whom it has executed more than one project constituted 83.26% and 64.35% of their total commissioned solar capacity, respectively.

The company’s operations are supported by a competent and sizable design and engineering team who are responsible for designing solutions that are innovative and cost-effective, with an aim to increase the performance ratio of solar power projects. The design and engineering team of 154 employees continually seeks to improve the efficiency of their solutions and services. SWSL strategically focuses on markets that have conducive solar power policies and high solar resources, and invest in geographies with long-term solar opportunities. It adopts a disciplined expansion strategy that is customized for each market with a view to enhancing its bidding abilities in these geographies. To tap opportunities in the United States, it adopted a co-development business model to help it secure EPC rights through equity investments in relevant projects. In other markets, such as Australia and Kazakhstan, it has acquired local entities to help it establish a permanent presence in such markets. In addition, as part of its expansion strategy, the company conducts on-the-ground market diligence to evaluate each local opportunity and establish relationships with local suppliers and subcontractors. This helps it identify potential bids in advance and prepare for bids quickly when opportunities arise.


Key Strategies:

1. Maintain market leadership through strategic expansion of overseas operations

Currently, SWSL has a presence across 26 countries, with its Subsidiaries and branch offices globally, and plans to continue expanding its operations through strategic expansion. It is focused on leveraging its global presence to continue to position itself as a credible and reliable EPC player and win repeat orders. The company aims to leverage the global presence of the SP Group and S&W to give it a head-start in expanding its

operations in new geographies. In particular, it expects to leverage its market leadership and customer relationships in Africa and India to be attractively positioned to bid for African projects funded by India under the International Solar Alliance (“ISA”) treaty.

2. Grow the customer base and maintain relationships with other key stakeholders

As there is a substantial opportunity to grow the company’s customer base in existing and new markets through a combination of its strong track record and market leadership in the regions in which it operates, its global presence (including through the broader network of the SP Group and S&W) and its relationships with key stakeholders in the solar power industry.

3. Focus on increasing operational and financial efficiency

SWSL plans to continue focusing on operational and financial efficiency by investing in its competent and sizable design and engineering team in India and their innovative engineering efforts. The company intends to continue to devote significant resources to recruit, train and retain a talented workforce and offer competitive compensation packages, training and career opportunities to attract and retain capable employees.

4. Focus on expanding O&M, rooftop solar EPC and solar storage solutions

The company plans to continue expanding its O&M operations to solar power projects that were not constructed by it. It is building a dedicated team for its O&M operations that is focused on adopting a targeted approach to winning contracts for O&M services. It also intends to continue developing its data analytics processes through the CMS and CMMS and leverage its experience of providing O&M services to understand solar modules and other equipment, which will help it improve its EPC and O&M services and win repeat orders. It also intends to benefit from the evolving energy storage and ancillary service technologies and intends to leverage from SWPL’s energy storage capabilities by offering solar + storage solutions.


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