Sahaj Solar Limited
Company
| Website 🔗 |  |
| Business Activity | Manufacture/Service |
| Division | Solar Energy |
| Sub-class | PV Modules, Solar Pumps, EPC |
| Location | Bavla, Ahmedabad, Gujarat |
| Establishment Year | 2010 |
Management
| Managing Director | Pramit Bharatkumar Brahmbhatt |
| Educational Qualifications | ACCA, MBA (Finance) |
| Experience | ~9 years in the solar industry |
| Annual Salary | ₹ 24 Lakhs |
| Total Number of Employees | 62 |
About
Sahaj Solar Limited is an integrated solar energy solutions provider with over a decade of experience in the renewable energy sector. The company operates in three primary business areas: PV module manufacturing, solar water pumping systems, and EPC (Engineering, Procurement, and Construction) services.
Products and Services:
PV Modules:
The company has a 100 MW capacity solar PV module manufacturing plant in Bavla, Ahmedabad, Gujarat. The plant produces mono-PERC (Passivated Emitter and Rear Contact) and multi-crystalline PV modules, catering to various solar projects in India and internationally. These modules find applications in on-grid and off-grid solar power systems, solar pumping, rural electrification, and other solar-powered devices. The solar PV modules are marketed under the brand name “SAHAJ.”
Solar Water Pumping Systems:
The company provides customized solar water pumping systems, including AC and DC solar pump sets, along with accessories like pipes and cables. These systems are designed for agricultural, drinking water, residential, and commercial applications. The company actively participates in government initiatives like the PM-KUSUM scheme to promote solar-powered irrigation among farmers.
Solar Mobile Trolley:
The company designs and customizes solar mobile trolleys for use in rural and remote areas. These trolleys are equipped with solar panels, pump controllers, and pumps, enabling farmers to irrigate their fields and access electricity for other purposes.
EPC Services:
The company offers EPC services for solar rooftop and ground-mounted projects, including design, engineering, procurement, construction, testing, commissioning, and maintenance.
Manufacturing Processes:
PV Module Manufacturing:
The plant utilizes crystalline photovoltaic technology to produce both mono-PERC and multicrystalline solar PV modules. The manufacturing process involves several stages, including cell stringing, glass loading, EVA placement, automatic layup, bussing, EL testing, lamination, trimming, framing, junction box fixing, curing, sun simulation, and final testing.
The company adheres to strict quality control measures and holds various certifications like ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018.
Solar Water Pumping Systems:
The company leverages its in-house manufacturing capabilities to produce key components like solar panels and mounting structures while outsourcing other components.
Clients
Government Customers:
MGVCL, DGVCL, PGVCL, GEDA, HAREDA, MEDA, Maharashtra State Electricity Distribution Co. Ltd.
- Private Customers:
Mahindra Susten, Mahindra Solarize, Secured Meters, Eglo, Shekhani Industries, Nuvoco Cements (Lafarge Cements), Tenneco, Valeo, Rotomag, Premier Solar, and Iron Mountain.
Raw Materials:
The primary raw materials used in the manufacturing of solar PV modules include:
- Solar cells (mono and multi-crystalline)
- Solar glass (low iron, anti-reflective coated, tempered)
- Encapsulant (EVA sheets)
- Backsheet
- Cell interconnects and bus bars
- Aluminum frame
- Adhesives
- Junction box
Suppliers
The company sources its raw materials from a group of regional and international suppliers. Key raw materials like solar cells are procured from both domestic and foreign suppliers. The company maintains a list of registered suppliers and procures materials on an order basis. It does not have any long-term agreements with its suppliers. Sources and related content
Other Key Aspects
Government customers generated 58.29% of the total revenue and the top 10 customers contributed 67% of the revenue.
Process Flowchart
Revenue – Category
Revenue – Region
Audit and Legal
Auditor’s Remarks:
The auditors provided a qualified report on the company’s restated financial statements. The qualifications were as follows:
- The Consolidated Restated Financial Information and the Consolidated Restated Summary Financial Statements have been adjusted for changes in accounting policies, prior period amounts, and other material amounts. The adjustments were made retrospectively to ensure consistency in accounting treatment across all reporting periods.
- The auditors relied on the audited financial statements for the year ended March 31, 2024, and the restated consolidated financial statements audited by the predecessor auditor for the preceding three years
Related Party Transactions:
For FY 2024, related party transactions accounted for approximately 0.38% of total revenues.
Non-Compliances and Other Issues:
Delayed Regulatory Filings and Non-Compliance:
The company delayed submitting required forms to the Registrar of Companies (RoC) and non-compliance with certain provisions of the Companies Act. While these issues might seem minor, they indicate a lack of strict adherence to regulatory requirements
Violation of the Companies Act:
The company extended a loan to a corporate entity where its directors had an interest. This action contravened Section 185 of the Companies Act 2013. Additionally, the company failed to charge interest on this loan, which is a violation of Section 186 of the same Act.
Unbilled Revenue Recognition:
The company recognizes unbilled revenue for projects where work has been completed but invoices haven’t been issued. The management believes there’s no uncertainty regarding the realizability of this revenue. However, recognizing revenue before invoicing can be aggressive and increases the risk of revenue recognition issues if the invoices are disputed or remain unpaid.
Lack of Provision for Interest on MSME Dues:
The company has not provided for interest on delayed payments to MSME creditors. This could be a potential non-compliance with the MSMED Act, which stipulates the payment of interest on delayed payments.
Contingent Liabilities:
As of March 31, 2024, Sahaj Solar Limited has contingent liabilities totalling INR 20.72 Crores.
Performance Guarantees: The largest portion, at INR 15.80 Crores, represents guarantees provided to customers, likely ensuring the company’s performance in fulfilling its contractual obligations.
Legal Cases:
Notice from MSME Commissionerate:
The company received a notice from the MSME Commissionerate in 2022, regarding delayed payments to a supplier, BKT Enterprise. The company withheld payment due to faulty materials supplied by BKT Enterprise.
Tax Proceedings against the Company:
Customs Duty related to export obligation: The company has an outstanding export obligation of approximately $34,265. If it fails to meet this obligation, it may have to pay customs duties amounting to INR 1.08 Crores, plus applicable interest.
GST/Service Tax/VAT Matters under dispute:
The company has ongoing disputes related to GST, service tax, and VAT, with a potential liability of INR 43.39 Lakhs.
SWOT Analysis
Strengths
| Integrated Business Model: The company’s involvement in both manufacturing and services (EPC and solar water pumping systems) provides a competitive advantage and potential for synergy. |
| Government Partnerships: The company’s empanelment with various government schemes and tenders ensures a steady flow of projects and revenue. |
| Strong Regional Presence: The company’s strategic location in a high-consumption zone provides access to a large customer base and government projects. |
| Quality and Certifications: The company’s adherence to international quality standards and certifications enhances its brand reputation and customer trust. |
Weaknesses
| Customer Concentration: Reliance on a few key customers can impact revenue stability if those relationships are disrupted. |
| Dependence on Suppliers: The absence of long-term contracts with suppliers can lead to price fluctuations and supply chain disruptions. |
| Working Capital Management: The company’s working capital requirements, especially in the solar pumping systems segment, can strain its cash flow and financial flexibility. |
Opportunities
| Growing Solar Market: The expanding Indian and global solar energy markets offer significant growth potential for the company’s products and services. |
| Government Initiatives: Supportive government policies and initiatives, such as the PLI scheme and PM-KUSUM, create favourable conditions for growth. |
| Expansion into Untapped Markets: The company can explore opportunities in underdeveloped countries and niche markets where customization and off-grid solutions are in demand. |
| Vertical Integration: The company can explore vertical integration opportunities, such as battery storage and green hydrogen production, to expand its product portfolio and revenue streams. |
Threats
| Intense Competition: The solar industry is highly competitive, with both domestic and international players vying for market share. |
| Regulatory Changes: Changes in government policies, subsidies, or regulations could adversely affect the company’s business. |
| Raw Material Price Fluctuations: The company’s reliance on raw materials like solar cells exposes it to price volatility and potential cost increases. |
| Global Economic Conditions: A slowdown in the Indian or global economy could impact the demand for solar energy solutions and affect the company’s financial performance. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE – HIGH |
| The solar industry in India has a low barrier to entry due to supportive government policies and decreasing technology costs. However, establishing a strong brand presence and securing government tenders can be challenging for new entrants. The need for significant capital investment in manufacturing facilities and working capital further increases the barriers to entry. |
| Bargaining Power of Suppliers | MODERATE |
| The company relies on a few key suppliers for critical raw materials like solar cells. The absence of long-term contracts with suppliers can expose the company to price fluctuations and supply disruptions, increasing the bargaining power of suppliers. However, the availability of alternative suppliers, both domestically and internationally, can mitigate this risk to some extent. |
| Bargaining Power of Buyers | MODERATE |
| While the company has a diversified customer base, its top 10 customers contribute significantly to its revenue. The presence of government entities as customers can increase the bargaining power of buyers to some extent, as these entities often have standardized procurement processes and long-term contracts. |
| Threat of Substitute Products or Services | LOW |
| Solar energy is a rapidly growing renewable energy source with increasing adoption worldwide. While other renewable energy sources like wind and hydro exist, solar energy’s cost-effectiveness, versatility, and decentralized nature make it a preferred choice for many applications. |
| Rivalry Among Existing Competitors | HIGH |
| The solar industry in India is highly competitive, with numerous players, both organized and unorganized, vying for market share. The company faces competition from both domestic and international manufacturers and EPC service providers. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers is as follows:
| Key Performance Indicator | Sahaj Solar Limited | Shakti Pumps (India) Limited | Zodiac Energy Limited | Solex Energy Limited |
| Revenue from Operations (INR Crores) | 201.00 | 1,371.00 | 220.00 | 366.00 |
| OPM (%) | 12 | 16 | 9 | 8 |
| ROE (%) | 53.2 | 24.2 | 26 | 20.8 |
| ROCE (%) | 39.4 | 31.4 | 22.4 | 17.9 |
| Debt-Equity Ratio | 1.72 | 0.11 | 0.85 | 2.08 |
Green Box
IPO Funds:
Funding Working Capital Requirements:
The company aims to raise funds to support its working capital needs, which are crucial for managing inventory, trade receivables, and other short-term operational expenses. The IPO proceeds will help the company meet the increased working capital demands arising from its business expansion and growth plans.
Integrated Business Model:
Sahaj Solar’s unique combination of manufacturing solar PV modules and providing EPC and solar water pumping services gives it a distinct edge. This vertical integration allows for better control over the supply chain, cost efficiencies, and the ability to offer comprehensive solutions to customers.
Government Partnerships:
The company’s strong relationships with government agencies and its empanelment in various government schemes and tenders provide a significant advantage in securing projects and accessing a stable revenue stream.
Strong Regional Presence:
Being located in one of the highest solar consumption zones in India, Gujarat, offers Sahaj Solar access to a large customer base and favourable government policies.
Declining costs of solar power technology:
The cost of solar panels and other components has decreased significantly over the years, making solar energy more affordable and accessible.
Industry Outlook:
The Indian solar energy market is expected to grow at a CAGR of approximately 19.8% in the next 5 years.
The Indian solar photovoltaic (PV) market is projected to grow at a CAGR of 9.8% between 2024 and 2032.
The India power EPC (Engineering, Procurement, and Construction) market is anticipated to expand at a CAGR of 22.7% during 2023-2031.
The market size for solar water pumping systems in India is expected to witness a CAGR of approximately 20% from 2022 to 2026.
Research and Development:
In-house design of solar trolleys:
The company has started designing solar trolleys internally to facilitate the setup of solar pumping systems for certain orders.
Development of agricultural products:
The company’s R&D team is working on developing agricultural machines like de-husking and de-stoning machines that can be operated using solar power. The prototype development for these products is currently underway.
Amber Box
Capacity Utilization:
The current capacity utilization rate, as of March 31, 2024, is 74.68%. The company’s PV module manufacturing plant has an installed annual capacity of 100 MW, but the effective installed capacity for one shift is 34 MW. The average capacity utilization during FY 2024 was 25.39 MW.
Focus on Rural and Agricultural Markets:
The company has a strong presence in the solar water pumping systems segment, catering primarily to the agricultural sector with its participation in government schemes like PM-KUSUM.
Debt Structure:
The company has Debt to Equity ratio of 1.72 with the majority being short-term borrowings. While this is not excessively high, it’s important to monitor the company’s ability to service its debt and manage its working capital requirements, given the significant portion of it being short-term borrowings.
Red Box
Operating Cash Flow(OCF):
The net cash flow from operating activities was negative in FY 2024, amounting to ₹-34.7 Crores.
Compliance with industry-specific regulations:
The company needs to comply with various industry-specific regulations, such as the Electricity Act, 2003, and the Approved List of Models and Manufacturers (ALMM) Order, 2019.
Export-import regulations:
The company engages in the export of solar PV modules and is subject to export obligations under schemes like the Export Promotion Capital Goods (EPCG) license. The text mentions a specific instance where the company has a pending export obligation of Rs. 108.39 lakhs.
Images
- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
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