Orient Green Power Company Limited - Product Note
Orient Green Power Company Limited - Product Note
Orient Green Power Company Limited - Product Note
09 December 2010
COMPANY LIMITED
India Pharmaceuticals Company Update XOXO
Funding their Subsidiaries, Orient Green Power Company (Rajasthan) Limited (“OGP Rajasthan”) for undertaking 8
MW biomass power project in Kishanganj, Rajasthan (“BM – 08 –Kishanganj”) and Beta Wind Farms Private Limited
(“BWFPL”) for undertaking 300 MW wind project in Tamil Nadu (“300 MW Tamil Nadu project”);
Funding their Subsidiaries BWFPL, PSR Green Power Projects Private Limited (“PSR Green”) and Shriram Non-
Conventional Energy Limited (“SNEL”) for repayment of existing debt availed from Indusind Bank, and prepayment
of existing debt availed from Yes Bank;
The Business
They are a leading Indian independent renewable energy-based power generation company focused on developing,
owning and operating a diversified portfolio of renewable energy power plants. They are the largest independent
operator and developer of renewable energy power plants in India based on aggregate installed capacity according
to the CRISIL Report dated as of March, 2010. Currently their portfolio includes biomass, biogas, wind energy and
small hydroelectric projects at various stages of development.
As of July 31, 2010, their total portfolio of operating projects included 213.03 MW of aggregate installed
capacity, which comprised 172.53 MW of wind energy projects and 40.5 MW of biomass projects.
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Orient Green Power Company Limited September 17, 2010
Their portfolio of committed and development projects included approximately 836.5 MW of prospective
capacity, which comprised an estimated 643.0 MW of wind energy projects, 178.5 MW of biomass projects and a
15.0 MW small hydroelectric project.
As of March, 2010, they had approximately 8.7% market share of total installed capacity of wind-based power
generation by independent power producers in India and 7.1% market share of total installed capacity of non
bagasse-based biomass-based power generation in India, according to the CRISIL Report.
They have grown their business by acquiring operating and development renewable energy assets from third parties
and by developing greenfield projects
Customers
They have a diverse customer base with a mixture of off-take arrangements. Their customers include SEBs,
distribution companies, private commercial and industrial consumers and a power trading company.
Tariff
They enter into PPAs with varying pricing arrangements depending on the type of customer, available tariffs, location
and term of PPAs. As a result of their renewable energy focus, they are able to avail of long-term contracted
renewable energy tariff rates that, in general, are higher than long-term contracted tariffs for conventional energy
and other incentives aimed at encouraging the renewable energy industry.
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Sale of Electricity
To private power consumers seeking to supplement state power supplies for captive purposes pursuant to short
-term PPAs in states where such sales are permitted. Captive consumers are generally larger power consumers
that have a greater need for reliable power and that benefit from additional sources of electricity, such as hotels
and manufacturers and are willing to pay higher tariff rates than they receive from selling power to the grid.
To SEBs pursuant to long-term PPAs which are generally approximately 20 years in length. Long-term PPAs
provide them with increased visibility on the revenue stream and an assured off-take.
Tariffs
India - Currently range from Rs. 2.70 to Rs. 5.00/kWh under their long and short-term PPAs.
Europe – They plan to sell to utility companies pursuant to long-term PPAs and expect that tariff rates for their
European wind projects will range from €0.09 to €0.10/kWh
Sri Lanka – They plan to sell to utility companies pursuant to long-term PPAs and expect that tariff rates for their
Sri Lankan wind projects will range from LKR20-LKR25/kWh.
Suppliers / Contractors
Currently operating wind farms - Acquired from 3rd parties with the manufacturers being mainly Das Lagerway,
Pioneer Wincon, NEG Micon, Suzlon, TTG, Enercon and Vestas.
Their primary WEG supplier for wind projects currently in development is Leitner Shriram Manufacturing Limited
(“LSML”).
On August 14, 2010, they entered into a non-binding letter of intent with Gamesa Wind Turbines Private Limited
for the supply and installation of 30 850kW WEGs for a total cost of Rs. 1,311 million for locations to be agreed
amongst the parties.
Exploring relationships with other major players in India, including Vestas.
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They expect the aggregate capacity of their wind energy business to increase by approximately 643.0 MW by March
31, 2013.
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Sale of Electricity
A mixture of private industrial and commercial consumers, distribution companies, power trading companies and
SEBs.
They generally enter into 20 year PPAs with SEBs, while PPAs for their other customers are generally shorter in
length.
Tariffs
Pursuant to long-term PPAs and their cogeneration BOOT agreement currently range from Rs. 3.50 to Rs.
4.94/kWh.
In the open access market for up to Rs. 6.50/kWh.
Suppliers / Contractors
Their principal turn-key contractor for their current development projects is their Promoter, SEPC.
The most critical equipment and components that comprise their biomass power plant projects are boilers,
turbines, generators, transformers, pumps, motors, cooling towers, condensers and water treatment plants.
Their major boiler suppliers are Thermax Limited and IJT Limited. Turbines are sourced principally from Triveni
Engineering Limited and Shin Nippon (Japan).
They buy fuel for their biomass power plants directly or indirectly from various local farms on an ad-hoc basis at
market price.
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They expect the aggregate installed capacity of their biomass business to increase by approximately 57.5 MW, 87.0
MW and 34.0 MW during the fiscal years ending in March 31, 2011, 2012 and 2013, respectively, to an aggregate
prospective capacity of 219.0 MW.
Other Businesses
They are developing their capabilities in a small hydroelectric power plant that would serve small communities or
industrial and commercial consumers. They are currently co-developing a 15.0 MW mini-hydroelectric power project
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in Orissa through their 51% ownership in a joint venture company. They are also evaluating opportunities in solar
and other renewable sources including waste-to-energy.
As of July 31, 2010, they have recognized 187,438 CERs from their biomass projects and 108,329 CERs from their
wind projects.
Biomass
3 of their operating biomass projects (representing approximately 23.0 MW in aggregate installed capacity)
are registered as CDM projects
They have submitted applications to register 9 projects with 91.0 MW of aggregate installed capacity as CDM
projects.
Wind Energy
Portions of 2 of their operating wind projects (representing approximately 30.0 MW of aggregate installed
capacity) are registered for CDM.
They intend to register all of their greenfield projects for CDM benefits.
Strengths
Growth Strategies
They are a leading Indian independent renewable energy-
Consolidate their leading position in the Indian
based power generation company
wind energy and biomass power sectors - Based
They operate in the rapidly growing renewable energy
on their current expectations for their portfolio
sector, which benefits from increasing demand for
of development projects, they expect to increase
electricity and regulatory support
their aggregate installed capacity by 132.5 MW,
They have a flexible business model that is scalable and
477.0 MW and 227.5 MW in the fiscal years
sustainable and that enables them to deliver predictable
ending March 31, 2011, 2012 and 2013,
growth from a diversified and balanced portfolio of
respectively.
projects
Maintain and enhance a diversified portfolio of
They have an experienced management and operating
renewable energy-based power projects with
team with relevant industry knowledge and expertise,
attractive returns – They are currently
including the ability to improve operational performance
developing a 15.0 MW small hydroelectric power
of acquired assets
project in Orissa, which is expected to be
They are able to leverage the expertise and experience of
completed and commissioned in the third
one of their Promoters, SEPC and its affiliate WEG
quarter of FY2012.
manufacturer, LSML
Seek new opportunities in international markets
They have secured debt financing for a significant
Improve profitability by enhancing efficiency
number of their committed and certain of their
Improve tariff yield
development projects - As at July 31, 2010, they had
Continue to recruit, retain and train qualified
secured debt financing for wind energy projects with an
personnel
aggregate prospective capacity of 300.0 MW and for
biomass plants with an aggregate prospective capacity of
101.0 MW, subject to certain conditions.
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Orient Green Power Company Limited September 17, 2010
Issue Size
(Rs in crores)
Amount # of Shares @
Category (Rs in crs) 47 55
Public Issue 900 191,489,362 163,636,364
QIBs 450 95,744,681 81,818,182
Non Institutional 135 28,723,404 24,545,455
Retail 315 67,021,277 57,272,727
Registered Office: Third Floor, Egmore Benefit Society Building, 25 Flowers Road, Chennai 600 084, Tamil Nadu.
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Orient Green Power Company Limited September 17, 2010
Promoters
Shriram EPC Limited – in the business of construction engineering.
Shriram EPC (Singapore) Pte Limited -engaged in the business of inter alia, engineering contract works,
establishment of power plants, including renewable energy and to carry on infrastructure related activities.
Orient Green Power Pte Limited, Singapore - engaged in the business of long term investment in entities across
various jurisdictions which undertake the business of production of renewable energy using non-conventional
sources.
Financials
Extracts of the Restated Consolidated Statement of Profit & Loss Account
(Rs in millions)
For the period Dec 6th For the year ended March 31st
Particulars 2006 to Mar 31st 2008 2009 2010
Total Income 0.39 122.66 632.19
Expenditure 12.03 214.07 751.71
Loss before tax (11.64) (91.41) (119.52)
Net Loss after tax and minority interest (11.67) (79.51) (122.41)
Represented by
Share Capital 152.95 404.49 2,765.89
Share Application Money - 107.46 -
Reserves and Surplus 606.33 1,611.73 1,175.46
Minority Interest 37.08 13.65 162.55
Less: Debit balance in Profit and Loss Account 11.67 119.87 242.28
Net Worth 784.69 2,017.46 3,861.62
(Source: Red Herring Prospectus)
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Orient Green Power Company Limited September 17, 2010
Ratios
Particulars As on March 31
2008 2009 2010
Earnings per Share (2.07) (1.03) (0.55)
Net Asset Value per Share- (Rs) 51.31 49.88 13.96
Return on Net Worth (%) (1.49) (5.61) (3.17)
(Source: Red Herring Prospectus)
Peer Comparison
Peers EPS (Rs) P/E Ratio RONW (%) Book Value per Sales (Rs in mns)
share (Rs)
OGPL (0.55) (*) (3.17) 13.96 441.58
Peer Group
Indowind Energy Limited 2.9 17.2 8.9 29.2 632
Jaiprakash Power Ventures Limited 1.2 60.0 13.6 16.1 6,907
JSW Energy Limited 4.9 25.7 23.1 32.7 23,729
NHPC Limited 1.7 17.9 6.1 18.9 42,189
Suryachakra Power Corporation Limited 0.4 - 1.1 18.1 2,069
Tata Power Company Limited 39.6 33.6 8.2 421.3 68,935
On Consolidated basis for the year ended on March 31, 2010
Financials for Peer Group are for FY10
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Orient Green Power Company Limited September 17, 2010
Disclaimer
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available to us. The information has been obtained from the sources we believe to be reliable as to the accuracy
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and accept no responsibility for statements made otherwise issued or any other source of information received
by you and you would be doing so at your own risk. The investment as mentioned in the document may not be
suitable for all investors. Investors may take their own decisions based on their specific investment objectives
and financial position and using such independent advisors, as they believe necessary. You are advised to
carefully read the entire offer document including all the Risk Factors mentioned in the offer document issued by
the Issuer before making any investment decisions. Neither we, nor our directors or employees are responsible
for any loss that you may incur by the use of information contained in this document.
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