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Jan 18, 2019, 16:56
K.P.I Global Infrastructure Limited IPO Note (Part 1)
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KPI Global Infrastructure Limited a subsidiary of the KPI Group is fundamentally involved in the generation and supply of solar power. It has broadened its horizons by extending its operations in building, operating and maintaining solar power grids. The company is recognized as both an Independent Power Producer and a Captive Power Producer service provider. It has branched out into selling and leasing land.

 

As an IPP the company generates solar power under the brand name of ‘Solarism’ and supplies it directly to the end consumer. Titled under CPP service provider, the client leases the land from KPI and enters into a contract with them for erecting and installing the power plant. They also have a further agreement for Operations and Management with the client.

 

KPI currently has 2 operating units. The first unit comprises of the Solar Plant for 5 MW built on the leased land of Solarism Plant and the Solar Plant for 10 MW operated on the owned land of Solarism Plant. Unit two is still in the pipeline and is expected to be operational from July’19. It contains the Solar Project for 25 MW at Sudi, Samiyala and Tanchha village.

 

The cost estimated for the completion of the project is Rs. 132.03 crores. The existing installed solar power projects hold a capacity of 15 MW. KPI intends to boost this capacity to over 25 MW through Unit 2 to cater to increased power requirement. They have entered into bilateral PPA’s with industrial consumers for a period of 3 years. These industries include Mafatlal Industries Ltd, Best Paper Mills Pvt Ltd and Meghmani Organics Ltd.

 

KPI has built the Amod Substation which is a 13.5km transmission line built from Solarism Plant to GETCO. It is being upgraded from 66KV to 220KV. The upgradation will increase its reliability. Higher the voltage, the availability of power becomes more. It will also enhance the intake capacity

 

Highlights of the issue

 

Object of the Issue:

 

 The Net Proceeds of the Issue after deducting the issue expenses shall be utilised for the following agenda.

•             To partly finance the 25MW solar power plant being built as Unit 2, at Sudi village, Samiyala village, Tanchha village in the Amod district of Bharuch, Gujarat.

•             For general corporate purposes.

 

 

 

Promoter of the Company:

 

Mr. Faruk. G. Patel is the promoter of the company. He holds a stake of 65.11% pre-issue paid up equity share capital of the company. He also holds the designation of the Chairman and the Managing Director of KPI. Apart from KPI,Mr. Faruk has affiliated in the past with Vaishali Salt and Chemicals Private Ltd, where he held the position of being the Director.

His business career dates back to 1994 with the inception of KP Buildcon Pvt Ltd. The business was primarily engaged in logistics and construction of residential buildings. He entered the market of renewable energy in 2008 under which he exploited the market for potential green energy projects. The diversification proved out to be a successful one. The company under his leadership has also made their presence in the fields of manufacturing textiles, Fast Moving Consumer Goods (FMCG), dredging and Manufacturing and Galvanizing of Telecom towers.

 

Organizational Structure of KPI:

 

 

Business Overview:

 

  • KPI has 2 verticals of operation IPP and CPI. They have signed bilateral PPA’s at Rs.6.58 with the end consumers.

  • Unit 2 which is located in the Sudi, Samiyala and Tanchha village is expected to be operational in July’19. The project has a total output of 25 MW.

  • The in progress unit 2 has already signed bilateral PPA’s for the entire 25 MW.

  • The First IPO launched by the KPI Group was KPEnergy Limited (KPEL). KPEL was incorporated on January 8th 2010. Recently it moved from the BSE SME to the main BSE trading platform. The scrip is currently trading at Rs. 209.50.Promoter of KPI Mr. Faruk Patel holds 48.61% stake in KPEL.

  • The company promoters have stellar history as their previous IPO of KPEL was recently shifted from BSE SME to BSE main trading platform.

  • KPI has the benefit of conducive government policies for renewable solar energy.

  • Under IPP vertical, the revenue it generates is directly linked with the current energy price which can increase or decrease according to the DISCOM prices.KPI receives revenue directly from the third party PPA’s. It gives 7% discount on power supply price.

  • Under CPP it generates revenue by assembling the Solar power units for captive customers and earns lease, rental and annual maintenance charges which are 25 years contracts.

  • Company’s power project is installed in a favorable geographical location with higher radiation and cooler ambient temperature resulting in sector leading 20% Plant load factor.

  • It has received term loan of Rs. 85 crore from Power Finance Corporation (PFC).

Issue Details:

 

The Initial Public Offer (IPO) is up to 49,92,000 equity shares of Face Value of Rs. 10 each.The issue size is of 39.93crore. IPO opens on 8thJanuary’19 and closes on 11th January’19.  The issue price is fixed at Rs.80 per share including a premium of Rs.70. The minimum lot size is of 1600 shares. The shares will be traded on BSE SME platform from a tentative date of 22nd January’19.

 

 

K.P.I Global Infrastructure Limited IPO Note (Part 2)

 

Click here to read the complete IPO note

 

K.P.I Global Infrastructure Ltd. Management walking the talk. Interaction with the management (Equity Right Exclusive) Part 1

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