Falling tariffs force Madhav Infra Projects to put its solar assets up for sale

By: and | Published: February 22, 2017 6:20 AM

Vadodara-based Madhav Infra Projects has put its 34 MW of solar assets up for sale. The company’s solar business is believed to be worth about R300 crore.

Madhav Infra Projects was among the early entrants in the solar sector with its projects commissioned between January 2012 and June 2013. (Representative Image: Reuters)

Vadodara-based Madhav Infra Projects has put its 34 MW of solar assets up for sale. The company’s solar business is believed to be worth about R300 crore. Analysts reckon the move marks an incipient trend given that solar firms’ margins are falling to wafer-thin levels, making it difficult for smaller players to be in the business.

Confirming the development to FE, Amit Khurana, managing director, Madhav Group, said that with a drop in tariffs for solar projects and foreign institutional investors (FIIs) pumping in funds into the sector, adding further capacity has become extremely difficult for investors like him. “Although we have not finalised any deal as of now, we were in talks with investors like IDFC Alternatives and Welspun Group,” Khurana said. “We are also open to FIIs who are willing to take a piece of our commissioned assets with equity investments,” he added.

Madhav Infra Projects was among the early entrants in the solar sector with its projects commissioned between January 2012 and June 2013. The tariffs prevailing at that time were in a range between R9 and R12 per unit. Aggressive bidding has over the last two years brought down solar tariffs to levels comparable to that of coal-based power.

Clouded by low tariffs, Madhav Infra puts solar assets on block Under the latest auction for the Rewa solar park, non-levelised tariffs for the first year have breached the R3 per unit mark.

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The entry of bigger players in the sector such as ReNew, Welspun and the Tatas that have deep pockets have resulted in a drop in solar tariffs, making it difficult for smaller companies. Besides, aggregators like IDFC Alternatives are looking to aggregate solar assets, and Chinese equipment manufacturers themselves are bidding for solar projects, making the tariffs very competitive.

Madhav Infra Projects has five operational projects spread across four states, namely, Gujarat, Madhya Pradesh, Karnataka and Punjab. The Madhav Group has now shifted its focus to rooftop solar with a capacity of around 20-30 MW. “We plan to bid for projects being put up by Indian Railways, Solar Energy Corporation and under Madhya Pradesh’s rooftop solar policy. The equity raised will be utilised for our future projects,” said Khurana.

The firm is listed on the BSE but its stock is inactive with no trades taking place. The company reported a net profit of Rs 2.9 crore in the third quarter on revenues of Rs 94 crore.

Vikas Srivastava & Rouhan Sharma

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