ACME Solar's IPO plans on hold; company overvalued itself in first DRHP

ACME Solar Holdings, the first renewable energy company to start listing procedure in India, might have dropped its initial public offering (IPO) plans. Market sources said the company was over-valued in their first attempt to issue the Draft Red Herring Prospectus (DRHP) and have given up on IPO plans for the time being.

ACME had filed its DRHP with the Securities and Exchange Board of India (Sebi) in September 2017 to raise more than Rs 20 billion. It later decided to revise the valuation by half and file the DRHP again. The deadline for refiling during last fiscal year had lapsed.

“According to Sebi guidelines, an issuer needs to refile the prospectus if it needs to modify the end use of the IPO beyond 20 per cent. Since we had a deadline to fund our under-construction projects that were supposed to be funded from IPO proceeds, we funded them from internal accruals and promoter equity. So the end use of funds to be raised from the IPO has changed and we will have to refile the prospectus again with the revised end use. Of course, current financials of March 2017-18 would also be captured in the revised filing since the earlier financials in the DRHP were valid till certain time,” Nikhil Dhingra, CEO, ACME Solar, said in an emailed response on queries regarding the IPO.

The company has also resorted to cost cutting, including retrenchment. More than 100 employees have been asked to leave at the engineering level and a dozen from the executive level, sources said.

ACME has, however, denied the move, saying that employee cost rationalisation was not part of cost reduction given the growth curve of the company. “The manpower number in ACME solar grew by 25 per cent in the past one year to match the growth of the company. We are geared up to ramp up our manpower further. Cost reduction is something that the company is very focused on through innovation and in-house execution of projects and engineering,” said Dhingra. ACME, a Gurgaon-based company, was founded by Manoj Upadhyay in 2003. The company has an operational capacity of 1,600 megawatt (Mw) and an upcoming capacity of 900 Mw. It quoted a record low tariff of Rs 2.44 per unit for 200 Mw in the bidding for Bhadla Solar Park last year. 

The company also has a contract for a 250-Mw unit at the Rewa solar park in Madhya Pradesh. The latest project won by the company was in Gujarat, where it quoted Rs 3.06 per unit for 100 Mw.

French majors EDF Energies Nouvellas and Luxembourg-based EREN Renewable Energy, which had 25 per cent stake each in ACME Solar, sold off their shares in 2016. ACME raised around Rs 5 million to buy their stake. Dhingra said all their projects were fully funded.