J U N E Cleantech Track. M o n t h l y u p d a t e o n t h e I n d i a n C l e a n t e c h S e c t o r

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1 J U N E Cleantech Track R e s e a r c h 4 I n d i a M o n t h l y u p d a t e o n t h e I n d i a n C l e a n t e c h S e c t o r News of the month Contents Solar RECs listed on power exchanges; India s first solar Renewable REC issued to M&B Switchgear News of the month 1 The two power trading exchanges Indian Energy Exchange (IEX) and Power Exchange India (PXIL) commenced trading of solar renewable energy certificates (RECs), thus opening a new source of revenue generation for solar power producers. The trading of RECs makes it easy for several obligated entities that may be required to purchase a certain quantum in either green power or RECs. M and B Switchgears has become the first solar power producer in India to be issued 249 solar RECs by the National Load Dispatch Centre in New Delhi. The company expects to generate additional revenue of around Rs 40mn from RECs. These certificates are tradable on the power exchanges and are bought by 'obligated entities' which are either specified consumers or electricity distribution companies. These obligated entities may be required to purchase a certain quantum of either green power or RECs. The obligations are split into non-solar and solar - - which means the obligated entities have to purchase either power from solar power projects or RECs generated by them. Private Equity Deals CER Price Chart Upcoming Events Calendar Corporate News Update Sector News Update Stock Market Update Financial Benchmarking About Four-S Services M and B Switchgear, headquartered in Indore, is a manufacturer of transformers. The company also has a 2 MW solar photovoltaic power plant. In , this plant is expected to generate close to 3,250 RECs. The government fixes the floor and ceiling prices of RECs for a specified period. The minimum and maximum prices for solar RECs for are Rs 9,300 and Rs 13,400 respectively. Therefore, if M and B s solar plant generates 3,250 RECs, the company could be richer by anywhere between Rs 30 million and Rs 43.5 million. The company is currently planning to set up a 20 MW solar power project under the REC scheme. About Research4India Research4India is the research services arm of Four-S Services Pvt Ltd. Here we provide regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. These reports will be available on our upcoming site as well as from leading international research sellers like Thomson Reuters, Bloomberg, Research and Markets, CapitalIQ etc. For subscription / custom queries, please contact Seema Shukla at seema@four-s.com

2 Private Equity Deals PE Deals in Cleantech - Last 6 months of 2011 and Jan-June 2012 Date Investor Target Amount ($mn) 2012 Segment Stage 6-Jun AMP Capital Shalivahana Green Energy 29 Hydro, Growth wind 17-Apr Bamboo Finance, Dr PK Sinha Greenlight Planet 4.0 LED lights Early 9-Apr Aavishkaar Vana Vidyut 3.6 Biomass Early 24-Feb Hyderabad Green India Building 0.4 Energy Early Angels Systems and Services efficient products 25-Jan Zephyr Peacock Gadhia Solar 9.8 Solar Growth 02-Jan JP Morgan Asset Management Leap Green Energy 18.1 Wind Growth Nov SBI-Macquarie Infra Fund Soham Renewable Energy 25.1 Hydel Late 21-Oct GE Energy Financial Moser Baer Clean Energy 58 Solar Project Services 10-Oct GE Energy Financial Greenko 50 Wind Project Services 27-Sep Goldman Sachs ReNew Wind Power 200 Wind Growth 07-Sep India Infrastructure Plc Shree Maheshwar Hydel 26.4 Hydel SPV 12-Aug IDFC India Infrastructure Caparo Energy India Ltd 33 Wind Growth 08-Aug IFC Shalivahana Green Energy 15 Biomass Growth 04-Aug IDFC PE Green Infra 18.2 Wind Growth 21-July IFCI Venture Amrit Jal Venture Ltd 6.7 Hydel Growth 18-July FE Clean Energy NSL Renewable Power 40 Renewable Growth There have been 6 deals in the cleantech space in 2012 till date totaling $64.9mn. The largest one includes JP Morgan s $18.1mn investment in Leap Green Energy, a renewable energy producer. Research4India 2

3 CER Price Movement 29- June 12 1 week (% change) 1M (% change) 3M (% change) 6M (% change) 12M (% change) CER (Spot Price in ) % 22.3% 8.7% 2.4% -61.8% CER Price Chart ( ) - Movement during the last month Jun 25-Jun 29-Jun Source: BlueNext Upcoming Events Calendar Reaction 2012 Date: July 26-27, 2012 Place: Chennai Organizer: Energy Alternatives India (EAI) Web: PV Manufacturing Summit India 2012 Date: August 1-2, 2012 Place: New Delhi Organizer: PV Insider Web: Solarcon India 2012 Date: September 3-5, 2012 Place: Bangalore Organizer: SEMI Web: Research4India 3

4 Corporate News Update IFC to invest $15mn in Shalivahana Green Energy Shalivahana Green Energy Limited (SGEL), a Hyderabad-based biomass power company, will get $15mn in equity from IFC, a member of the World Bank Group. The investment will support the company's expansion of about 200 MW of its biomass power projects in Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa and Tamil Nadu. The company has a capacity of 50.4 MW. Through its post-2012 Carbon Facility, IFC will also commit to purchase up to 1.5 million Certified Emission Reductions or CERs from energy projects developed by Shalivahana during 2013 to IFC will pay for a preagreed percentage of the spot price of the CERs at the time of delivery, subject to a minimum price. Tata Power lights up two villages in Maharashtra with solar energy Two villages in Maharashtra which had no electricity till now have been linked up by Tata Power's solar power initiative. Tata Power Community Development Trust has provided power to about 50 households in Limbarvadi and Bhadaskonda of the Mulshi region in Pune. Tata Power said the project is an effort to implement the Nabard (National Bank for Agriculture and Rural Development) scheme for solar energy-based home-lighting systems. The cost for a household is between Rs 16,000 and Rs 26,000, based on consumption. Apoorva Renewable Energy to make solarelectric buses for transport body Buses in Bangalore may soon be powered by solar energy. The Bangalore Metropolitan Transport Corporation (BMTC) has placed orders with Apoorva Renewable Energy Products to design solar-electric hybrid buses. The company makes three-wheeled vehicles powered by electric and solar power, and customises products for Indian conditions. Currently, the company's vehicles are used in Delhi and parts of Karnataka and it will start exporting in two months from now. All the vehicles are fitted with batteries and one can switch from solar power to the batteries. The batteries, once fully charged, can cover about 120 km at a speed of 60 kmph Mytrah wind farm capacity to cross 500 MW by March 2013 Independent power producer Mytrah Energy Ltd is set to increase the total installed capacity of the company s wind assets to 500 MW by March next from about 250 MW of capacity now installed across four States of Maharashtra, Rajasthan, Gujarat and Andhra Pradesh. In Andhra Pradesh, the company has an installed capacity of 60 MW of wind farms and is ready to develop another 200 MW by March next. The company has closed funding requirement for about Rs 10bn of equity and has tied up Rs 20bn debt from various lenders. Lanco Solar's Rajasthan thermal unit will be ready by March Lanco Solar's 100 MW solar thermal power plant to be set up with an outlay of Rs 18bn in Rajasthan will be ready by first quarter next year. This project will take the company's EPC contract portfolio to 350 MW. The company had bid for a tariff of Rs 10.5 and is at an advanced stage of implementation. Welspun Energy to invest $1bn in two wind farms Welspun Energy Ltd., an Indian independent power producer, plans to invest $1bn to build two wind farms in the state of Karnataka in the next five years. The company, a unit of Welspun Group, said it signed agreements with the government of Karnataka for projects with 100 MW and 750 MW of capacity. The facilities to be developed in the districts of Bijapur, Chitradurga and Belgaun contribute to the company goal of installing 1.7 GW of solar and wind parks, or enough to supply power for as many as 9 million homes in India. Research4India 4

5 Anu Solar to widen presence Solar water-heater maker Anu Solar, the Rs 600mn company plans to double its revenues by the end of the year, and is expanding operations across the country. The Bangalorebased company will set up 70 centres across the country, from 28 in the South now. The company is self-funded and expects to come out with an IPO in about four years, after it crosses the Rs 10bn revenue mark. Anu Solar is also widening its range of products and is entering the off-grid segment, with solar power generators. The company has formed a joint venture (JV) with a German company SEI AG to manufacture products that are similar to diesel power generators. Azure Power to raise $4.6mn from IFC Azure Power India Private Limited is raising around $4.6mn from International Finance Corporation (IFC). The fund raising will support the company's proposed $6.2mn investment plan to set up, own and operate solar power plants in Gujarat. Azure Sun Energy Private Limited (Azure Sun) is a 100% subsidiary of Azure Power India Private Limited (AZI), which develops, constructs, owns and operates solar power plants to develop the project in Gujarat. Currently, the company has 17MW of solar power projects operational and another 40MW under development. Bharat Light, Mytrah Energy eye DLF's wind power business Bharat Light and Power, a cleantech company promoted by former president and chief executive of GE India, Tejpreet Chopra, and the Hyderabad-based Mytrah Energy are in the race to buy real estate firm DLF's wind power business for around Rs 10bn. The board of DLF, which is selling non-core assets as part of a big debt restructuring exercise, has already approved the divestment. DLF s wind power assets include wind turbine generator-based power plants with installed capacities of 150 MW in Kutch, Gujarat and 11.2 MW at Gadag, Karnataka. The company has an additional 70 MW of installed capacity spread across plants in Tamil Nadu and Rajasthan. SunBorne Energy plans to raise $20mn for India investments The US-based SunBorne Energy, which has two solar projects in India, has informed the US Securities and Exchange Commission that it intends to raise $20mn by an issue of equity shares. It said that it has already raised $5mn. SunBorne Energy is funded by Khosla Ventures, promoted by the India born, US-based billionaire venture capitalist, Mr Vinodh Khosla. SunBorne has a 15 MW solar PV plant in Gujarat. Earlier this year, it won a 5 MW solar PV project in Rajasthan under Phase I of the National Solar Mission. More recently, it won a bid to set up a 10 MW solar thermal project in Karnataka. Novozymes, Praj Ind to set up facility to develop bio-fuels Industrial enzyme maker Novozymes and biofuel developer Praj Industries will jointly set up a demonstration facility to develop fuels from biomass. A demonstration facility is a smallscale plant that makes enzymes or chemicals, and is a transition between labs and a commercial manufacturing unit. Novozymes will supply enzymes that will help in converting biomass (such as wheat straw, rice straw, corn cobs ands bagasse) into bio-fuels such as ethanol. IFC invests $2.7mn in ATM maker Vortex Engineering The International Finance Corporation (IFC), a member of the World Bank Group, Monday announced it is investing $2.7 million as equity in the Chennai-based low-cost ATM maker, Votex Engineering. The IFC, in a statement, said the investment was being made to help Vortex Engineering to expand its network of solar powered ATMs across India's rural and semi-urban areas where people had limited or no banking services. Vikram Solar commissions solar plant in Gujarat and Orissa Vikram Solar, a Kolkata based solar module manufacturer, has announced the commissioning of two new power plants - one in Research4India 5

6 Gujarat and one in Rourkela, Orissa. The Gujarat power plant is a 5MW power plant and the second plant in Orissa is capable of producing 1 MW power. Both these projects have been built under the policy guidance from Indian Renewable Energy Development Agency (IREDA). Fortis Healthcare eyes 26% stake in renewable energy companies Fortis Healthcare Ltd is looking at acquiring a stake in a renewable energy company through its subsidiary Fortis Malar Hospital for captive purpose. According to the plan, Fortis Malar would invest around Rs 2mn in equities of a wind power company to acquire at least 26% stake. The move comes as part of the Chennaibased Fortis Malar Hospital s plan to source green power from a renewable energy company, an environment-friendly move which will also help the hospital cut its expenses. Sector News Update India banks face setback as projects delayed, fined Banks may restrict loans to Indian solar projects after the government fined 13 projects for delays, including one owned by Indian Oil Corp. (IOCL). An inquiry found 13 of 20 projects in northwestern Rajasthan state missed their deadline, according to a list from the Ministry of New and Renewable Energy. The delays and penalties are a setback for lenders and may make it more difficult and costly especially for inexperienced solar companies to raise finance. India will need at least $3.2bn of debt finance in the next three years to complete already-announced solar projects, according to the Asian Development Bank. The 13 delayed projects face a total penalty of about $8mn. Solar Power bids below Rs 9 per unit risky: CRISIL CRISIL Research, India s largest independent integrated research house, believes that the pace of reduction in capital costs of solar PV projects is expected to moderate in 2012 resulting in pressure on profitability of players who have bid aggressively below Rs. 9 per unit under batch 2 of JNNSM. Almost half the bids under JNSSM have been below Rs 9 per unit and about a fourth of the bids below Rs 8.5 per unit, making these investments highly risky. Capital costs fell by 30% (y-o-y) to Rs 100mn per MW by the end of The fall in costs was driven by a 50% drop in the prices of solar PV modules, which account for almost half the capital costs of a PV project. Module prices crashed due to the aggressive capacity build-up by China in 2010 and The significant additions to module capacities by the Chinese have resulted in overcapacity of nearly 50% in the global module market. Karnataka plans solar park with up to 500 MW of capacity Karnataka Renewable Energy Development Ltd. (KREDL) has entered into a public-private partnership to develop a solar park with up to 500 MW of generation in Karnataka. KREDL is currently seeking Karnataka state government approval for the 10 square kilometer park at Mannur village, Bijapur district, Karnataka. The company has already taken steps to support 80 MW of solar generation in the districts of Bijapur and Gulbarga, and plans to increase this generation by 40 MW annually. CARE puts off solar grid parity to 2017 Unlike the majority of research estimating solar grid parity by 2014 or 2015, rating agency CARE has said that it expects grid parity to be achieved only in Observing that the cost of solar cells had been rapidly declining in the past due to a glut in the market thanks to overcapacities in China CARE said that it expects a slowdown in the price-fall, mainly because the cost of balance of systems (the non-panel part of the plant) has been going up. Balance of Systems accounts for 40% of total project cost, CARE said, noting that the rising labour and land costs would also cap cost reduction. Consequently, CARE Research expects the cost reductions to occur at 10-11% year-on-year till 2017 compared with 35-40% fall seen in the last few years. Research4India 6

7 Stock Market Update Share Price Performance Companies Mcap (29-June- 12) Rs Mn Price (29- June-12) 1 week (% change) 1M (% change) 3M (% change) 6M (% change) 12M (% change) NHPC 224, % -0.5% -7.1% 1.1% -24.0% Jaiprakash Power Venture 91, % -2.7% -14.4% -1.1% -27.1% Suzlon 32, % 2.8% -26.7% 3.1% -62.9% VA Tech Wabag 13, % 11.1% 18.0% 49.3% -1.6% Praj Industries Ltd. 10, % 4.8% -27.1% -22.1% -23.6% Ramky Infra 5, % 7.4% -52.0% -49.8% -62.2% Orient Green Power 5, % -3.0% -12.1% 30.5% -36.4% Entegra 3, % -4.5% 0.6% -18.5% -47.0% Shriram EPC 2, % 5.4% -25.8% -24.8% -62.4% Ion Exchange 1, % 12.4% 17.1% 37.9% -8.2% Moserbear 1, % -9.1% -44.4% -34.6% -76.7% Indosolar 1, % 2.2% -15.3% -18.6% -71.3% IndoWind Energy % 28.0% 4.2% 11.6% -74.4% Asian Electronics % -7.4% -14.1% 11.5% -39.6% Nifty - 5, % 6.6% -0.3% 14.2% -6.5% Sensex - 17, % 6.9% 0.1% 0.1% -7.5% Valuation Benchmarking ` Mkt Cap (Rs mn) EV (Rs mn) Revenues TTM Mar'12 EBITDA TTM Mar'12 PAT TTM Mar'12 EV/Revenue EV/EBITDA P/E NHPC 224, ,977 69,203 47,744 30, Jaiprakash Power Venture 91, ,840 16,156 14,560 4, Suzlon 32, , ,592 18,212 (4,786) NM VA Tech Wabag 13,366 11,710 14,435 1, Praj Industries 10,644 9,472 10, Ramky Infra 5,911 24,447 39,340 5,822 2, Orient Green Power 5,224 16,396 2, (693) NM Entegra 3,013 33,208 0 (106) (480) NM NM NM Shriram EPC 2,668 16,950 18,618 1, Ion Exchange 1,720 1,987 7, Moserbear 1,530 23,044 20,961 2,812 (3,098) NM Indosolar 1,377 5, (1,141) (2,024) 6.5 NM NM IndoWind Energy 562 1, Asian Electronics 216 2,432 1,033 (460) (807) 2.4 NM NM Figures in `mn Research4India 7

8 Financial Benchmarking Quarter ending 31 st March, 2012 Companies Revenue EBITDA PAT Margins Q4FY'12 Q4 FY 11 Q4 FY 12 YoY Q4 FY 11 Q4 FY 12 YoY Q4 FY 11 Q4 FY 12 YoY EBITDA PAT Suzlon 73,721 68, % 8,035 4, % 4,316 (3,002) NM 5.9% NM NHPC* 11,381 14, % 10,533 9, % 6,384 8, % 68.9% 55.6% Moser-Baer* 4,590 4, % NM (1,312) (596) NM 18.6% NM Ramky Infrastructure 12,941 14, % 1,515 2, % 914 1, % 14.4% 7.2% Shriram EPC* 4,770 6, % % % 6.7% 0.7% VA Tech Wabag 5,099 6, % % % 13.4% 9.0% Jaiprakash Power Venture* 1,690 2, % 1,441 2, % 169 (68) NM 83.0% NM Praj Industries* 2,047 2, % % % 9.0% 3.8% Orient Green Power % 138 (60) NM 17 (460) NM NM NM Ion Exchange* 1,843 2, % % % 6.0% 4.0% Asian Electronics* 342 NA NM (184) NA NM (324) NA NM NM NM Indosolar* % (20) (213) NM 47 (137) NM NM NM IndoWind Energy* % % % 26.7% 15.2% Entegra 3 - NM (17) (32) NM (70) (131) NM NM NM * Standalone results Figures in `mn FY12 Results Companies Revenue EBITDA PAT Margins FY 12 FY 11 FY 12 YoY FY 11 FY 12 YoY FY 11 FY 12 YoY EBITDA NPM Suzlon 180, , % 7,853 18, % (13,238) (4,786) NM 8.5% NM NHPC 51,437 69, % 42,876 47, % 23,162 30, % 69.0% 44.6% Moser-Baer* 18,729 20, % 1,400 2, % (4,007) (3,098) NM 13.4% NM Ramky Infrastructure 31,470 39, % 3,718 5, % 2,061 2, % 14.8% 6.2% Shriram EPC 16,694 18, % 1,836 1, % % 7.8% 2.2% VA Tech Wabag 12,418 14, % 1,210 1, % % 9.0% 5.1% Jaiprakash Power Venture 7,369 16, % 6,168 14, % 1,618 4, % 90.1% 24.8% Praj Industries 6,674 10, % % % 9.3% 6.8% Orient Green Power 2,093 2, % NM 108 (693) NM 24.4% -27.6% Ion Exchange 6,097 7, % % % 3.9% 1.3% Asian Electronics* 1,473 NA NM (421) NA NM (793) NA NM NM NM Indosolar* 5, % 203 (1,141) NM (583) (2,024) NM NM NM IndoWind Energy* % % % 46.6% 14.2% Entegra % (72) (106) NM (423) (480) NM NM NM * Standalone results Figures in `mn Research4India 8

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