Regreen-Excel EPC India Limited Files DRHP for IPO: A Deep Dive into the Company and Its Growth Prospects
Regreen-Excel EPC India Limited, a technologically advanced engineering, procurement, and construction (EPC) company, has taken a significant step towards entering the capital market by filing its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO). The company, known for its expertise in developing, producing, and supplying ethanol facilities, plans to leverage this IPO to fund its future growth initiatives and solidify its position in the rapidly growing renewable energy sector.
Overview of Regreen-Excel EPC India Limited
Regreen-Excel EPC India Limited specializes in engineering, procurement, and construction (EPC) services with a strong focus on ethanol plants. By March 31, 2024, the company had established itself as a young yet prominent player among Indian manufacturers and suppliers of ethanol plants, according to the Frost & Sullivan (F&S) Report. The company’s offerings span various segments, including distillery plants, sugar and cogeneration plants, biofuels, zero liquid discharge systems, and renewable energy solutions.
The company’s core business involves providing end-to-end solutions to clients by designing, constructing, and commissioning ethanol production facilities and related infrastructure. Regreen-Excel EPC India aims to be at the forefront of India’s ethanol manufacturing sector by adopting advanced technologies and sustainable practices. With increasing government focus on reducing carbon emissions and promoting cleaner fuel alternatives, Regreen-Excel is well-positioned to capitalize on this trend.
Details of the IPO
The IPO will consist of a fresh issue of equity shares amounting to ₹350 crore and an offer for sale (OFS) by the promoter selling stockholders of up to 11,450,380 equity shar:es. The promoters selling shares include:
Sanjay Shrinivasrao Desai: Up to 3,944,020 equity shares
Tushar Vedu Patil: Up to 1,501,272 equity shares
Alimuddin Aminuddin Sayyed: Up to 1,501,272 equity shares
Kiran Sudhakar Gavali: Up to 1,501,272 equity shares
Rokesh Luis Mascarenhas: Up to 1,501,272 equity shares
Sagar Satish Raut: Up to 1,501,272 equity shares
These shares offered by the promoters, along with the fresh issue, are expected to enhance the company’s capital base and provide the necessary funds for growth and expansion.
Objectives of the IPO
The net proceeds from the IPO are planned to be utilized in several ways:
Funding Capital Expenditure Needs: A significant portion of the proceeds will be used to finance the company’s capital expenditure requirements. This includes investing in new equipment, technologies, and infrastructure to enhance its capabilities in the ethanol production and renewable energy sectors.
Repayment or Prepayment of Debt: The company plans to use part of the funds to repay or prepay certain outstanding loans. This will help reduce the debt burden and improve the overall financial health of the company, providing more flexibility for future investments and expansions.
Funding Margin Money for Bank Guarantees: Another portion of the proceeds will be allocated towards funding the margin money required to obtain bank guarantees. These guarantees are essential for securing new contracts and projects, ensuring a steady flow of business opportunities.
General Corporate Purposes: The remaining funds will be utilized for general corporate purposes, which may include working capital requirements, marketing, and administrative expenses. This allocation will provide the company with the necessary resources to support its day-to-day operations and strategic initiatives.
Book Running Lead Managers and Advisors
ICICI Securities Ltd and IIFL Securities Ltd have been appointed as the book running lead managers for the IPO. These firms will play a crucial role in coordinating the IPO process, managing the book-building process, and ensuring compliance with regulatory requirements. Their involvement reflects the company’s commitment to conducting a transparent and efficient public offering.
Company Background and Expertise
Regreen-Excel EPC India has quickly emerged as a key player in the ethanol plant construction and renewable energy sectors. The company’s rapid growth can be attributed to its technologically advanced approach, focus on sustainability, and ability to deliver high-quality projects on time and within budget.
The company has extensive experience working on various projects both domestically and internationally. Notably, Regreen-Excel EPC India has successfully executed projects in countries like Turkey and Thailand, showcasing its ability to operate in diverse markets. Within India, the company has completed projects across 17 states, including Northern India, Southern India, Eastern India, Western India, and Central India.
As of July 15, 2024, Regreen-Excel EPC India had 64 active projects in its order book, with a total value of ₹3,451.68 crore. This impressive portfolio reflects the company’s strong market presence and ability to secure significant contracts. Additionally, between April 1, 2024, and July 15, 2024, the company received 15 new orders totaling ₹1,046.25 crore, further solidifying its position as a leading player in the industry.
Market Opportunity and Growth Prospects
The global and domestic market for ethanol and renewable energy is poised for substantial growth, driven by increasing demand for cleaner and more sustainable energy sources. In India, the government’s ambitious ethanol blending program aims to achieve a 20% ethanol blend in petrol by 2025. This initiative presents a significant growth opportunity for companies like Regreen-Excel EPC India that specialize in ethanol plant construction and related services.
The Indian government has also introduced various incentives and subsidies to encourage the production and use of ethanol, which is expected to drive demand for new ethanol production facilities. With its strong track record and expertise, Regreen-Excel EPC India is well-positioned to capitalize on these opportunities and expand its market share.
Furthermore, the company’s focus on developing zero liquid discharge (ZLD) systems and renewable energy solutions aligns with the global trend towards sustainable practices and environmental responsibility. ZLD systems are becoming increasingly important in industries where water conservation and wastewater management are critical concerns. As more businesses and governments prioritize sustainability, Regreen-Excel EPC India’s expertise in this area could drive additional growth.
Competitive Advantages
Regreen-Excel EPC India has several competitive advantages that position it strongly in the market:
Technological Expertise: The company’s use of advanced technologies in the design and construction of ethanol plants and renewable energy systems sets it apart from its competitors. This technological edge allows the company to deliver high-quality, efficient, and cost-effective solutions to its clients.
Comprehensive Service Offering: Regreen-Excel EPC India offers a wide range of services, including engineering, procurement, construction, and commissioning of ethanol plants, biofuel facilities, and renewable energy projects. This end-to-end approach allows the company to cater to the diverse needs of its clients and provide integrated solutions.
Strong Project Execution Capabilities: The company has a proven track record of completing projects on time and within budget, both in India and internationally. This reputation for reliability and quality has helped Regreen-Excel EPC India build strong relationships with clients and secure repeat business.
Experienced Management Team: The company’s management team comprises seasoned professionals with extensive experience in the EPC and renewable energy sectors. Their expertise and leadership have been instrumental in driving the company’s growth and expansion.
Diversified Project Portfolio: Regreen-Excel EPC India’s diversified project portfolio, which includes ethanol plants, biofuel facilities, zero liquid discharge systems, and renewable energy projects, reduces its dependence on any single market segment and provides multiple growth avenues.
Financial Performance and Stability
Regreen-Excel EPC India has demonstrated robust financial performance in recent years, driven by its strong order book and effective project execution. As of July 15, 2024, the company had 64 active projects valued at ₹3,451.68 crore, providing a stable revenue base for the future. The company also received 15 new orders worth ₹1,046.25 crore in the first quarter of FY 2024-25, indicating strong demand for its services.
The company’s focus on reducing its debt burden through the IPO proceeds is expected to strengthen its balance sheet and enhance its financial stability. By lowering its debt levels, Regreen-Excel EPC India can reduce its interest expenses, improve its credit profile, and increase its capacity to take on new projects and expand its operations.
Risks and Challenges
While Regreen-Excel EPC India has strong growth prospects, it is not without risks and challenges:
Regulatory Risks: The company’s operations are subject to various environmental and regulatory requirements, both domestically and internationally. Changes in regulations or non-compliance with existing regulations could impact the company’s ability to operate and grow.
Market Competition: The EPC and renewable energy sectors are highly competitive, with several established players vying for market share. Regreen-Excel EPC India must continuously innovate and maintain its technological edge to stay ahead of its competitors.
Dependence on Government Policies: The company’s growth is closely tied to government policies and incentives related to ethanol production and renewable energy. Any adverse changes in these policies could affect demand for the company’s services.
Project Execution Risks: While the company has a strong track record of successful project execution, any delays or cost overruns could impact its profitability and reputation.
Foreign Exchange Risks: As the company expands its operations internationally, it is exposed to foreign exchange risks, which could affect its financial performance.
A Promising Future Ahead
Regreen-Excel EPC India Limited’s decision to go public through an IPO marks a significant milestone in its growth journey. With a strong track record, a diversified project portfolio, and expertise in the rapidly growing ethanol and renewable energy sectors, the company is well-positioned to capitalize on emerging opportunities.
