a) Project execution: INR 83 Cr(included in Trade Receivables in the Financial Statements) which has been withheld/recovered by certain customers related to EPC contracts on account of Liquidated damages, generation loss etc. which the Company has not acknowledged and the matter has been referred to Arbitration/court as per the terms of the respective contracts. The management is hopeful of resolution of the matter in favor of the Company and necessary adjustments will be made based upon the outcome of the arbitration proceeding.

b) Corporate Governance: Remuneration paid to the Managing Director and Executive Directors of Company, during the year ended March 2023 which has exceeded the limit prescribed under section 197 of the Companies Act, 2013 by INR 1.367 Cr which is subject to approval of the Shareholders of the Company. Pending such approval, no adjustment has been made in the financial statements.

1. Government policy on solar: The Government of India has launched various schemes to encourage generation of solar power in the country like Solar Park Scheme, VGF Schemes, CPSU Scheme, Defence Scheme, Canal bank & Canal top Scheme, Bundling Scheme, Grid Connected Solar Rooftop Scheme etc.

2. Government targets to expand solar capacity to 280 GW by 2030 from 67 GW currently by adding an average addition per year of 30 GW over next seven years. The cost for 1GW solar cell is about Rs. 2500 crore leading to an estimated annual market size of approximately Rs. 75000 crore for the targeted growth in India.

3. ALMM and how it benefits Indian module manufacturers: ALMM" typically refers to "Approved List of Models and Manufacturers." It is a regulatory framework and certification system established by the Ministry of New and Renewable Energy (MNRE) in India. The ALMM framework is primarily associated with solar photovoltaic (PV) modules and is designed to ensure the quality and performance of these modules used in solar projects. Here's how ALMM benefits Indian module manufacturers:

A) Quality Assurance
B) Eligibility for Government projects
C) Access to incentives and subsidies
D) Market Credibility
E) Competitiveadvantageinexportmarket

As on August 17, 2023, the Vikram Solar is one of the largest enlisted capacities in the Ministry of New & Renewable Energy’s Approved List of Module Manufacturers (“ALMM”).

Basic Custom duty on Solar Module and Solar cells: India started levying a customs duty of 40 % on solar modules and 25 % on solar cells from April 2022 in a bid to cut imports and boost local manufacturing. Earlier it was 20%.

Top 5 players in Solar manufacturing in terms of capacity:

A) WAAREE ENERGIES LIMITED: Waaree Energies Ltd. was founded in 1989. Since its beginning, it has covered a long journey of more than 3 decades and now comprehends a manufacturing capacity of over 12GW. Waaree Energies is the largest solar panel manufacturer in India and maintains a noticeable position in the solar energy sector while having a presence in over 380 locations in India & 20 foreign nations.

B) ADANI SOLAR GROUP: Adani Solar was incorporated in 2016. This solar panel manufacturer in India has a 4 GW manufacturing capacity. The company

offers mono facial & bifacial modules (in PERC Technology) which help to tap solar energy. Currently, Adani Solar is creating an ecosystem for 10 GW Solar PV Manufacturing in India.

C) VIKRAM SOLAR: Vikram Solar was founded in 2006. A presence in the solar energy sector of more than 32 countries, experience in the installation of 1.42 GW projects in India, and annual manufacturing capacity of 3.5 GW modules make Vikram Solar a competent brand in the solar energy industry. This solar panel manufacturer is ambitiously working to meet India’s green energy goal of 500 GW by 2030. So far, Vikram Solar has commissioned more than 300 projects at multiple locations.

D) GOLDI SOLAR PRIVATE LIMITED: Gujarat-based Goldi Solar was started in 2011. It offers solar energy products in the domestic market as well as in 20 other countries. Goldi Solar has achieved a record growth from 10 MW to 500 MW manufacturing capacity in a span of just 10 years. Goldi Solar has annual manufacturing capabilities of 2.5 GW and is currently planning to add another 2000 MW by the end of 2023.

E) SAATVIK GREEN ENERGY PVT. LTD.: Saatvik Green Energy Pvt. Ltd. started its journey in the solar sector in 2015 from Haryana. It actively contributes to the solar energy sector with an annual production capacity of 1 GW. This solar panel manufacturer has its manufacturing plant in Ambala (Haryana) and soon going to set up another one with a capacity of 1.2 GW at Gandhidham, Gujarat

Key Highlights Vikram Solar Unlisted Shares for FY24

Financial Highlights:

1. Revenue: INR 2510 Cr
2. EBITDA: INR 398 Cr
3. PAT (Profit After Tax): INR 79 Cr
4. Share of Exports in Revenue: 61.58%

Operational Highlights:

1. Total Modules Manufactured: 16,11,014 modules in FY 2023-24
2. Modules Shipped Globally: 878 MW in FY 2023-24
3. Cumulative MW Modules Shipped Globally: Over 5 GW from FY 2010-11 to FY 2023-24
4. EPC Projects in Portfolio (Commissioned): Over 1,400 MW
5. O&M Projects in Portfolio (Ongoing): Over 700 MW

Manufacturing Facility

Operational Facilities:

• Falta SEZ, Kolkata, West Bengal:

• Capacity: 2.2 GW
• Advantages: Strategic location in SEZ with proximity to ports, rail, and road networks, facilitating seamless distribution to domestic and international markets.
  
  

• Oragadam, Chennai, Tamil Nadu:

• Capacity: 1.3 GW
• Focus: Catering to increasing demand in the solar energy sector, promoting sustainable progress.

Upcoming Facilities:

• Gangaikondan, Tamil Nadu:

• Capacity: 3 GW cell and 6 GW module manufacturing. Manufacturing plant to be operational by FY 2025-26.
• Purpose: Significant capacity expansion.

• USA:

• Status: Site selection stage for a new solar PV manufacturing facility.
• Goal: To meet the growing demand for renewable energy in the United States.

Financial Analysis of Vikram Solar

Balance Sheet and Cash-Flow Analysis

As of 31st March 2024, the company has a total debt of ₹600 crore in long-term debt and ₹200 crore in short-term debt. Outstanding dues to creditors amount to ₹582 crore. On the asset side, the company holds ₹112 crore in trade receivables, ₹114 crore in cash, and ₹388 crore in inventory. The total current liabilities stand at ₹141 crore, while total current assets amount to ₹197 crore, resulting in a current ratio of 1.39x, which is considered manageable. The total equity is ₹460 crore, leading to a debt-to-equity (D/E) ratio of approximately 1.73x—on the higher side. However, after a recent ₹700 crore private placement in June 2024, the D/E ratio is expected to drop below 1.

The company generated approximately ₹170 crore from operations. Out of this, ₹68 crore was allocated for purchasing property, plant, and equipment (PPE), ₹25 crore was used to repay long-term debt, and ₹137 crore was spent on interest costs. Additionally, the company took out a short-term loan of ₹93 crore. In total, the ₹170 crore from operations, combined with the ₹93 crore loan, amounted to ₹260 crore, which was used to purchase ₹68 crore in assets and pay off ₹198 crore in debt.

In summary, due to the high debt levels and capex, the company generated only ₹7 crore in cash.

P&L Analysis

1. The company's top line has grown by 21% in FY24, reaching INR 2,523 crore. Notably, 61% of the revenue has been generated from exports, with a significant contribution from the US market. The US ban on Chinese module companies has opened up opportunities for countries like India, Indonesia, and Vietnam. The US market also offers higher margins. Additionally, Vikram Solar is establishing a manufacturing unit in the US to capitalize on the new solar policy, which makes local production more profitable than exporting from India.

2. The company has achieved an EBITDA of INR 398 crore in FY24, a significant increase from INR 200 crore in the previous year.

3. The company recorded a PAT of INR 80 crore in FY24, up from INR 13 crore in the previous year.

4. The company is currently valued in the unlisted market at approximately INR 9,000 crore market capitalization.

UnlistedZone’s View

Vikram Solar is positioned as a significant player in the global solar energy market, showing impressive growth and strategic advancements. The company has successfully expanded its manufacturing capacity to 3.5 GW in FY 2023-24, with plans to reach 10.5 GW by FY 2025-26, reflecting its commitment to scaling operations and meeting increasing demand. Their involvement in both manufacturing and EPC business further diversifies their revenue streams and market reach.

A key strength of Vikram Solar is its eligibility for major subsidies, such as the Production Linked Incentive (PLI) for its 2.4 GW solar facility and the TNGO scheme. These financial incentives support its growth, allowing for more aggressive expansion and innovation. The integration of advanced technologies like the n-TOPCon technology in their Hypersol product demonstrates the company’s focus on staying at the forefront of technological advancements in the industry.

Financially, Vikram Solar reported strong performance in FY24, with revenue of INR 2,510 crore, EBITDA of INR 398 crore, and a PAT of INR 79 crore. The significant contribution of exports, particularly to the U.S. market, where margins are higher, underlines the company’s strong international presence. The decision to establish a manufacturing unit in the U.S. aligns with the new solar policies there, potentially boosting profitability further.

However, the company faces challenges with a high debt-to-equity ratio, standing at approximately 1.73x as of March 2024. The recent ₹700 crore private placement is expected to alleviate some of this financial pressure, lowering the D/E ratio below 1. Despite the high debt, the company has managed its finances efficiently, maintaining a manageable current ratio of 1.39x.

Looking ahead, Vikram Solar’s strategic investments in R&D, coupled with its broad market presence across various solar segments, position it well for continued growth. The upcoming expansion of their manufacturing facilities in India and the U.S. will likely enhance their capacity to meet global demand. With its valuation at approximately INR 9,000 crore in the unlisted market, Vikram Solar stands as a promising player, poised for significant future growth in the renewable energy sector.