'SP2B' grading to Vikram Solar Private Limited - ICRA

Grading Drivers
VIKRAM SOLAR PRIVATE LIMITED
ICRA has assigned an ‘SP2B’ grading to Vikram Solar Private Limited (VSPL), which indicates ‘High
Performance Capability’ and ‘Moderate Financial Strength’ of the channel partner to undertake off-grid
solar projects.
Strengths
• Technology tie-ups with leading global solar photo voltaic cell and module manufacturers
which have helped the company manufacture modules of acceptable product quality.
• Long term working relationship with supplier of solar photo voltaic cells, which is among the
leading solar photo voltaic cell manufacturers in the world.
• Established and diversified client base in Europe and India.
• Strong growth in sales and operating income in the one and a half year of operation
• Large order book position from the overseas and domestic clients that indicates technical
capabilities and marketing initiatives of VSPL.
• Availability of fiscal incentives, being located in a Special Economic Zone (SEZ).
Risk Factors
• Adverse capital structure and a high working capital intensity of operations which adversely
impacts liquidity.
• Limited track record of operation of VSPL and the lack of a long experience of the promoters
in the business, although the company was able to commission its project ahead of the
schedule and stabilise its operations.
• A large number of players indicating a high level of competition that may lead to pressure on
margins going forward.
Grading Rationale
While assigning the grading ICRA has taken into consideration VSPL’s technology tie ups with leading
global solar photo voltaic cell and module manufacturers, the long term working relationship that VSPL
enjoys with its solar photo voltaic cell supplier which is also among the leading cell manufacturers in the
world, the company’s established and diversified client base in both the domestic and the overseas
markets, a large order book position indicating the technical capabilities of VSPL and its successful
marketing initiatives, the satisfactory operating track record of the company’s module so far and the fiscal
incentives that the company enjoys being located in a Special Economic Zone. ICRA has also taken note of
the relative lack of experience of the promoters of the company in the solar photo voltaic module
manufacturing and installation business, however, partially mitigated by the recruitment of professionals
with experience in the industry.
The overall financial profile of VSPL is characterized by a healthy return on capital employed and strong
growth in operating income, which is the result of the execution of large orders secured in 2010 -11 and
early commissioning of its second module production line that helped VSPL to quickly ramp up production
to higher levels. However, VSPL’s adverse capital structure with a gearing at 3.00 time as on 31 st March
2010 and its stretched liquidity position attributable to high receivables reflect an unfavourable financial risk
profile.

Financial Performance - Moderate
SI Related Business – High Performance Capability
• Promoter Track Record: Vikram Solar Private Limited is promoted by the Vikram group based
in Kolkata. The group has been involved with various engineering units specializing in tea
processing, machinery manufacturing and synthetic textile manufacturing. However the
promoter’s experience in the solar energy domain is limited to the operating track record of
Vikram Solar Pvt Ltd. During this period the company has installed around 16 MW of solar
photo voltaic modules cumulatively in both the domestic and the overseas markets. In addition
VSPL has also supplied solar photo voltaic modules to other system integrators through its
distributors in Europe and India.
VSPL’s manufacturing facilities are ISO 9001: 2008 certified by TUV Nord, Germany. The
company’s products and systems have been accorded quality approvals by various test
agencies such as Communauté Européenne (CE) and Underwriters Laboratories (UL).
• Technical Competence and Adequacy of Manpower: VSPL has solar photo voltaic module line
capacity of 43 MW. At present VSPL’s operations are not backward integrated and the
company procures solar cells from Taiwan. The company’s technical competence is
strengthened through its technical collaboration and support provided by M/S Spire
Corporation, USA and NPC Inc, Japan. Under the terms of the support provided by these
companies, VSPL enjoys R&D, training and product efficiency support from these companies.
The company has adequate manpower resources with 130 technical professionals and around
90 non-technical and support staff. To mitigate the risk of having a limited operating track
record, VSPL has recruited a number of professionals, experienced in the field of solar power.
• Quality of Supplier and Tie-ups: VSPL procures solar photo voltaic cells from Motech
Industries Inc of Taiwan. Motech Industries is one of the leading solar cell manufacturers in
the world and VSPL enjoys a good working relationship with the company.
• Customer and O&M Network: VSPL has diversified a client base having installed solar photo
voltaic modules in Europe as well as in India for both the public and private sector companies.
VSPL has set up offices in Pune, Raipur, Noida and Kolkata to cater to after sales
maintenance services thus having an O&M network covering Northern, Central, Western and
Eastern India.
Revenues Moderate revenues of Rs 33.52 crore in 2009-10
and Rs 100.15 crore in April-February 2010-11*.
Return on Capital Employed (RoCE)
Healthy ratios of 25.4% in 2009-10 and 17.9% in
April-February 2010-11*.
Total Outside Liabilities / Tangible Net Worth Weak ratios of 3.32 times in 2009-10 and 2.38
times in April-February 2010-11*.
Interest Coverage Ratio
Interest coverage ratio comfortable at 3.01 times
during 2009-10 and 2.82 times during April-
February 2010-11*.
Net Worth
Substantial increase in net worth to Rs 36.25 crore
as on 28 th February 2011* from Rs 17.44 crore as
on 31 st March 2010 following an equity infusion

and accretion to reserves.
Current Ratio
Increase in current ratio from 1.2 time as on 31 st
March 2010 to 1.9 time as on 28 th February 2011*
because of increase in receivables and inventory.
Relationship with bankers
Bankers are satisfied with the account’s conduct.
* Based on provisional 2010-11 results till February 2011.
For further details please contact:
March, 2011
Analyst Contacts:
Mr. Jayanta Roy, (Tel. No. +91-33-22876617 / 22800008)
jayanta@icraindia.com
Relationship Contacts:
Ms. Anuradha Ray, (Tel. No. +91-33-22876617 / 22800008)
anuradha@icraindia.com
Disclaimer: An ICRA SI grade reflects ICRA’s opinion on the ability of the graded system integration
company to undertake off-grid solar projects. This grading does not constitute an audit by ICRA of the SI.
The gradings are based on information provided by the company or obtained by ICRA from sources it
considers reliable. ICRA does not guarantee the completeness or accuracy of the information on which the
grading is based and therefore shall not be responsible for any liability incurred by the users of such
grading. An ICRA SI grading is not a recommendation to use the services of the SI, or to invest in any
project undertaken by the SI, or to lend to the SI or invest in any financial instrument issued by the SI. ICRA
has the right to revise gradings as and when circumstances so warrant.
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