To overcome challenges, one must put in the effort; nothing is impossible if one
refuses to surrender.
Dear Shareholders,
It gives me great pleasure to address you, yet again, after what has been a great year
at KP Energy. I would like to begin by extending my heartfelt gratitude towards our
shareholders, team members and all our other stakeholders for standing by us through these
uncertain times. Your belief and trust in us keep fuelling our passion to create a
sustainable future.
INDUSTRY AND COMPANY PERFORMANCE IN FY22
I will present to you the scenarios that we witnessed this year, and have communicated
repetitively in my recent interactions with our stakeholders. Wind Energy faced its fair
share of challenges and hiccups in the recent past, especially during the second wave of
the pandemic in mid-2021. The pandemic induced an indirect disruption in the industry, due
to slowed down production of wind towers, just like other industrial activities. To add to
this, severe supply chain congestions and inflationary pressure further dampened our
business activities briefly. While supply chain and inflationary environments persist, the
industry has responded well to these challenges and has, in fact, grown in 2021 with
installations of close to 1.4 GW compared to the previous year's 1.1 GW.
Further, auction activities also gained momentum, with nearly 2.7 GW of wind auctions
along with 1.96 GW of hybrid auctions awarded by the Government agencies. Overall, the
second half of 2021 and early 2022 witnessed a revival of spirit within the industry, as
is evident from KP Energy's recent performance.
Needless to say, our fourth quarter was the best quarter by far, in terms of topline.
However, as is true for the entire industry, we witnessed a compression in profitability
margins which can be mainly attributed to an increase in commodity prices and input costs,
coupled with a not-so-lucrative EPCC contract mix, i.e. contracts with WTG supply and
contracts without WTG supply. Nevertheless, at KP Energy, we are confident that we will be
able to pass on these increased input costs to respective stakeholders and secure our
profitability margins in the long run.
THE YEAR GONE BY
Our financial performance has been a mixed bag. While we witnessed robust growth, as is
evident from our Revenue from Operations which stood at f250.4 crores compared to f69.0
crores in the previous year resulting in a 263% increase year- on- year, our EBITDA margin
for the year stood at 13.7% which is lower compared to the previous year's 25.8% due to
aforementioned reasons. Further, our PAT stood at Rs. 20.9 crores in FY22 compared to
Rs.7.2 crores in the previous year. Apart from a strong recovery in our EPCC business, we
also witnessed a steady increase in our OMS businesses, with the addition of O&M
contracts during the year.
Further the Company improved on its Debt to Equity ratio, which stood at 0.28 at the
end of FY22 compared to 0.45 in the previous year. The Company also improved its interest
coverage ratio, in addition to its increase in profitability. The strength of our balance
sheet gives us an optimistic outlook, which will prove to be a significant advantage for
the Company, as it will help us absorb transitionary difficulties and take on
utility-scale projects. Further, we hope to leverage our strong financial position to
emerge as our industry's best BoP solution provider.
GOVERNMENT IMPETUS
The Indian Government has been vocal about its faith and confidence in the renewable
energy sector. In fact, the Prime Minister's recent announcement at COP26 in November 2021
has only validated our work and its direction. At the event, India made a commitment to
develop 500 GW of non-fossil fuel energy capacity by 2030, which in effect, would render a
50% renewable energy mix by 2030. This certainly bodes well for us at KP Energy, as we are
not only equipped but geared to share in this vision and help fulfil this commitment.
Along with the long-term vision set by the Indian Government, various policy measures
from respective authorities have also aided in catalysing the industry's performance in
recent times. Some of these policies include an extension in the waiver of ISTS charges
for renewable projects commissioned by June 2025 and innovative auction models for hybrid
projects, among others. Further, the Government is also working on grid integration of
almost 44 GW of new renewable power assets through Green Energy Corridors (GEC).
What could be a crucial challenge as we advance is the availability of land and the
speed with which it can be procured to carry out such large-scale energy projects, but the
Indian Government has proactively tried to address this by corresponding with various
industry bodies to alleviate impediments such as Right of Way challenges and attaining
defence and forest clearance. These multiple measures, policies and directions come as a
relief to the industry, as it presents a clear understanding of the way forward and
enables the industry to armour itself in accordance with the grander vision.
OFF-SHORE WIND ENERGY POTENTIAL
In recent times, the Indian government's initiatives have also added momentum to its
off-shore wind sector. In consultation with the industry participants and bodies, the
Ministry of New and Renewable Energy (MNRE) has floated a prospective wind bid trajectory
outlining India's bold ambitions in this sector. The government has announced an off-shore
wind capacity of 4 GW for auctioning in the very first year, i.e. FY23, and has expressed
its intent to maintain the same run rate of 4 GW for another two years up until FY25, and
after this period, the capacity may be enhanced further. Furthermore, in a bid to make
off-shore wind energy projects more lucrative for investors, the Indian government has
also announced incentives such as carbon credits for the first 8 GW of capacity and free
transmission of power from off-shore to onshore pooling stations. This space is
undoubtedly exciting for us at KP Energy, and we are tracking developments and evaluating
opportunities for potential projects in this space.
STRONG BUSINESS PIPELINE
Our strong order book that includes a healthy business pipeline of ~1081 MW is what
gives us confidence and keeps us brimming with optimism. As we venture into FY23, we at KP
Energy are excited and geared for what lies ahead: the largest ever business pipeline in
the Company's history. As we move forward and execute these projects in the pipeline and
create further opportunities, we are certain that it will change the fate ofKP Energy and
its growth trajectory for good. While the task seems mammoth and certainly not an easy
one, we are confident in our abilities, execution and people to carry us through and
beyond. We will put our best foot forward, and with the support and enthusiasm of our
team, clients and all our stakeholders, we are optimistic that we will come out stronger,
better and sharper.
Sincerely,
Farukbhai Gulambhai Patel
CHAIRMAN.