by Suman Gupta
GK Energy Limited, a pure play engineering, procurement and commissioning (“EPC”) provider of solar-powered agricultural water pump systems, which comprises direct-to-beneficiary sales and sales to others, has filed its Draft Red Herring Prospectus (DRHP) with capital markets regulator the Securities and Exchange Board of India (SEBI) to raise funds through an Initial Public Offering (IPO).
The IPO with a face value of ₹2 is a mix of fresh issue of shares up to Rs 500 crore and an offer for sale of up to 84,00,000 equity shares by selling shareholders. The offer includes reservations for subscriptions by eligible employees.
Offer for Sale consists of shareholders selling shares up to 80,00,00 equity shares by Gopal Rajaram Kabra, and up to 4,00,000 by Mehul Ajit Shah.
The company, in consultation with the BRLMS, may consider a Pre-IPO placement of specified securities, aggregating up to ₹100 crore. If the Pre-IPO placement is completed, the amount raised pursuant to the Pre-IPO placement will be reduced from the fresh issue.
The proceeds from the fresh issue to the extent of Rs 422.46 crore will be used to fund its long-term working capital requirements and general corporate purposes.
The Offer is being made through the book-building process, wherein not more than 50% of the net offer is allocated to qualified institutional buyers, and not less than 15% and 35% of the net offer is allocated to non-institutional and retail individual investors respectively.
GK Energy Ltd is India’s largest pure play provider of engineering, procurement, and commissioning (EPC) services for solar-powered agricultural water pump systems. These systems, also known as solar-powered pump systems, are offered under Component B of the Central Government’s Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan (PM-KUSUM) scheme. It is measured by the number of solar-powered pump systems installed under the PM-KUSUM scheme between January 1, 2022, and December 3, 2024, as per the CRISIL Report mentioned in the DRHP.
The company specializes in the EPC of solar-powered pump systems, catering to both direct beneficiaries and other customers. Direct-to-beneficiary sales involve delivering GK Energy branded solar-powered pump systems to farmers who select the company as their vendor on state government-designated agency portals (referred to as state nodal or implementing agencies, SNAs/SIAs). These orders are placed under the PM-KUSUM scheme and similar state-level initiatives. Additionally, the company provides solar dual water pump systems (which include water storage) to local government bodies. The sales to other customers include fulfilling direct orders for solar-powered pump systems placed with the company.
GK Energy also delivers a range of additional EPC services, such as the setup and installation of water storage and distribution systems under the Jal Jeevan Mission, a Central Government initiative implemented via urban local bodies. Other offerings include supplying and installing solar products for government agencies and rooftop solar solutions, collectively termed as “Other EPC Services.” Furthermore, the company is engaged in trading activities, selling photovoltaic (PV) cells, solar modules manufactured by third parties, and other related products.
Operating on an asset-light business model, the company procures solar panels, pumps, and various components for its solar-powered pump systems under the GK Energy brand from specialized vendors. However, it plans to backward integrate by manufacturing its own solar panels, which constitute the largest cost component for direct-to-beneficiary EPC projects. This transition aims to enhance cost efficiency and is in line with its performance over the past fiscal years.
As of November 30, 2024, GK Energy leases 13 warehouses spread across three states.
The company provides farmers with an end-to-end solution, encompassing survey, design, supply, assembly, installation, testing, commissioning, and maintenance of solar-powered pump systems. It is empanelled as a vendor under the Ministry of New and Renewable Energy for the PM-KUSUM scheme in Maharashtra, Haryana, Rajasthan, and Uttar Pradesh, and has applied for empanelment in Madhya Pradesh. As of September 30, 2024, these four states accounted for 81% of solar-powered pump systems approved for subsidies under Component B of the PM-KUSUM scheme, while Madhya Pradesh contributed an additional 4%, according to the CRISIL Report. The company is also empanelled under various other state government schemes.
The PM-KUSUM scheme demonstrates the Central Government’s commitment to providing energy and water security to farmers by promoting solar-powered pump systems for irrigation, replacing diesel-powered and grid-connected pump systems. As of September 30, 2024, 1,342,327 solar-powered pump systems had been approved under Component B of the PM-KUSUM scheme, with 499,319 of these systems already installed by empanelled providers. GK Energy accounted for 42,778 installations, representing 8.56% of the completed orders. Additionally, the company has installed 16,293 solar-powered pump systems outside the PM-KUSUM scheme.
GK Energy’s Order Book was ₹759.18 crore as at October 1, 2024.
Revenue from operations increased by 44.23% to Rs 411.09 crore in fiscal 2024 from Rs 285.03 crore in fiscal 2023, primarily due to an increase in its revenue from the EPC for solar-powered pump systems. Profit after tax increased by 258.04% to Rs 36.09 crore in fiscal 2024 from Rs 10.08 crore in fiscal 2023.
For the six months ended September 30, 2024, revenue from operations stood at Rs 421.93 crore, and profit after tax stood at Rs 51.08 crore.
IIFL Capital Services Limited, and HDFC Bank Limited, are the book-running lead managers and Link Intime India Private Limited is the registrar of the issue. The equity shares are proposed to be listed on the National Stock Exchange of India Limited and BSE Limited.
