Any update on High Court decision which was supposed to Come on 12th August with regard to KUSUM Scheme
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Greatt news for Shakti Pumps:
As per investor relation team it has ben advised that the Court orders have come in the favor of the KUSUM project and supply will eventually start from first week of September.
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Can you share the source here
Confirmed by investor relation team. I had called and confirmed.
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Honble High Court order dated 12.08.2021 with regard to tender participation in KUSUM scheme.
http://delhihighcourt.nic.in/dhcqrydisp_o.asp?ctype=W.P.(C)&cno=6648&cyear=2021&orderdt=16-Jul-2021
http://delhihighcourt.nic.in/dhcqrydisp_o.asp?ctype=W.P.(C)&cno=6648&cyear=2021&orderdt=12-Aug-2021
1626763615482_73577_2021.pdf (533.4 KB)
1629140015218_2021 KUSUM COURT FINAL ORDER.pdf (771.0 KB)
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Can you please explain the order in simple language.
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In very simple language the matter is that around 4 vendors had challenged their non selection as supplier vendors for supply of solar pumps under KUSUM Scheme.
Court has now upheld that the rejection of the vendors is as per selection criterion of KUSUM scheme and dismissed the application of Vendors.
The scheme had got delayed because of this pity reason. It would have been better if Court would have not put an hold on KUSUM scheme and separately reviewed the application of Vendors.
Management has already advised in the Concal that even if the four vendors would have been selected then also it would not have made any impact on the demand for the Company as the opportunity size is so large.
In my assessment also even if 10 new vendors are also included then also it will be very difficult to meet the demand of Solar pumps under the Scheme. I have hardly found 2 to 3 serious players in Solar pump segment.
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Tata Power as per their latest Anual Report is targeting for installation of around 1 million Solar pump under the KUSUM scheme in next 5 years.
Solar Pump Business has been highlighted in multiple places in the annual report of Tata power, however the same is missing in the Annual report of major pump players in India.
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In Tata Power’s Investor Presentation Link, they talk about how Solar Pumps could be a 5000 crore business in FY25 (for them), with market size of around 32000 crores (19000 crores off grid pumps and 13000 crores in on-grid pumps).
They also talk about how they are the market leaders. However, they have very similar numbers as compared to Shakti as you can see in the slide provided by them. (However, I still have some doubts regarding the competitive intensity it can bring for the company considering the growth that the industry is poised to do.)
There is significant difference in management qualities of both of these companies. Hence, the execution levels could be very different. Both of them are optimistic on the exponentially growing market. Shakti, at these levels gives significant amount of margin of safety in case they don’t execute enough. H2FY22 should be exceptional for them considering the orders will start getting executed from first week of September.
Discl: Invested
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I feel Shakti is far better placed then Tata Power for playing Solar Pumps for the following reason:
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Shakti is fully focused on Solar Pump where as Tata Power is a diversified player in Power sector.(Renewable/NOn Renewable, Solar ,EPC , Rooftop etc).
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Shakti has in house Pump manufacturing facility whereas Tata Power has to out source it. In many cases Shakti itself is supplying Solar Pumps to Tata Power for installation.
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Shakti being a pump manufacturer will definitely have an edge over Tata Power for after sales services.
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Another critical component of Solar pump is VFD (starter) which has been developed in house by Shakti Pumps whereas Tata Power will have to procure from outside.
(Shakti Pumps
https://www.shaktipumps.com/view_pdf.php?path=pdf/Simha/Shakti_Solar_Drive_Manual_L5_10Jan2020_.pdf&name=Shakti_Solar_Drive_Manual_L5_10Jan2020_) -
Shakti has done backward integration and is also making structures for installation of solar panels through its 100% subsidiary where as Tata Power will have to outsource it.
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Last and the most important thing for Solar pump is Solar panel which has to be purchased from third party by both Tata Power and Shakti Pumps. With the economies of scale that Shakti Pump is estimated to achieve it is expected that the cost will be similar for both Tata power and Shakti Pumps.
Shakti and Tata Power had been the only major focused player in Solar Pump for the last 5 to 6 years but I feel Shakti is better placed.Also if you want to play purely on Solar Pump then also Shakti is a better candidate.
Competitive intensity will not be there as the opportunity size is humongous but because of integrated approach Shakti will get higher margins.
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KUSUM NOTIFICATION AUG 21.pdf (432.4 KB)
Application Process for 25000 Nos of Solar Pumps Tender Maharashtra
https://www.mahadiscom.in/solar/howtoavail.html
25000 Solar Pump Madhya Pradesh
https://cmsolarpump.mp.gov.in/
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Tata Power makes their own solar panel according to their website
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Yes, I also think Shakti Pump is much better placed than Tata Power. Although I believe Tata Power has much more credible and realistic management, it has many lines of businesses which makes it difficult for them to focus a lot on the pump business. However, what I was implying through my post is that if a realistic management of Tata Power can aim for a 13x growth in next 5 years, I do believe Shakti with a similar scale can easily achieve it, assuming that management executes it properly. The only other doubt that I have is the competitive intensity this industry can see considering such immense industry growth.
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Great report, i too recently started analyzing the pump sector. I just think (i may be wrong and most of the time i am😅) that roto pumps can be a beeter invested opportunity than shakti oump just based on valuation. Shakti pumps is popular than roto due to advertising. But both same just difder on wroking capital efficiency which might both.
You views are welcomed.
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Please go through this list. Roto pumps is not a player in Solar Pumps.
As per Roto Pumps balance sheet 31.03.2021.
"Solar pumping systems business is to be undertaken by a wholly owned subsidiary of the Company incorporated in the name of Roto Energy Systems Ltd. Working on the project has commenced and it is expected that the trial production would be started in the first quarter of the next financial year. Considering the global focus on renewable energy and thrust of Indian Government to PM-KUSUM
(Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) Scheme, this business vertical would provide tremendous opportunity for the growth of the Company in the years to come.
Your Company has embarked upon to pursue two new businesses. One is Downhole pumps for artificial lift and Mud Motors for drilling of wells in Oil & Gas industry. This would involve a capital outlay of Rs 40.00 Crore. Another business is Solar pumping systems, which is to be undertaken in
a wholly owned subsidiary company. This would involve a capital outlay of Rs 11.00 Crore. A wholly owned subsidiary in the name of Roto Energy Systems Ltd has been incorporated and an initial capital of Rs 55.00 lakhs has also been contributed. Preliminary work for these new products
has been commenced. Your Company would also redevelop its existing Noida Unit to produce small to medium sizes componts of pumps and in-house surface treatment facility, which is being outsourced at present
Roto Energy Systems Ltd - a wholly owned subsidiary in India is incorporated during the year to carry on business of solar pumping systems. The Subsidiary has yet not commenced its
business activities"
Roto will start its trial production next Financial year…
Further ,again at the cost of repetition I would like to emphasize that the opportunity size is so large that all players will have enough business opportunity…but the focused player will take the cream…
Disclosure : Invested and increased my stake recently at current levels…
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Btw, has the latest dividend been credited?
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Is this the news that has given a steep rise to the stock price ?
Disc: Not invested. Checking
Can someone Validate this estimate pls
Attempt is to estimate the farmer’s income If she/he installs a solar pump in the field. ( Part C of the PM- KUSUM scheme)
Assumptions : A 5 KW solar panel is attached to the pump & monthly about 600 units of power (in KWH) is generated.
Now the TNERC has approved a pricing of Rs 2.28 per unit and an additional incentive of max 1 Rs per unit.
So conservative estimate says the farmer will earn 3 x 600 x 12 = 21600 per year
The farmer’s total investment is 40% of the cost of the pump ( Approx total cost of 5 lakhs) = 2 lakhs
So assuming the farmer borrows this 2 lakhs from Nabard at 7.5%, he would still be positive by about 3% and he gets continuous free power for his irrigation needs.
The State government makes huge savings by not having to give FREE power and it would have grid supply from these very farmers… Looks like Win-win situation for all…or have I missed something ?
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