Ravindra Energy Ltd: Annual Report 2023-24 Analysis

Overview #

Comprehensive Analysis #

This analysis delves into the Ravindra Energy Limited annual report for the fiscal year 2023-24, examining its financial performance, business segments, identified risks, and ESG (Environmental, Social, and Governance) initiatives.

I. Financial Performance:

The report presents both standalone and consolidated financial statements. A significant divergence exists between the two, primarily due to the inclusion of subsidiaries and an associate company in the consolidated figures. This makes direct year-over-year comparisons challenging without careful consideration of the impacts of acquisitions, divestments, and the amalgamation of Agri Venture Trading and Investment Private Limited.

A. Standalone Financial Highlights:

• Revenue: Increased slightly from ₹638.59 million in FY2022-23 to ₹650.01 million in FY2023-24, driven by growth in contract revenue from solar projects (₹448.96 million vs ₹257.92 million).
• Profit After Tax (PAT): Showed substantial improvement, rising from ₹42.21 million to ₹108.43 million. This improvement is significant and warrants further investigation into the underlying factors.
• Key Ratios: Significant changes are noted in several key ratios (see Table below). The dramatic increase in trade receivables turnover and trade payables turnover requires examination of credit policies and collection efficiency. The decline in debt service coverage is concerning, needing scrutiny of debt levels and cash flow generation.

Standalone Key Ratios (FY2023-24 vs FY2022-23):

B. Consolidated Financial Highlights:

• Revenue: Declined significantly from ₹2,858.01 million in FY2022-23 to ₹1,464.40 million in FY2023-24. This substantial drop necessitates an analysis of the performance of individual subsidiaries and the impact of divestments. The drop in traded sugar revenue is particularly notable.
• PAT: Shows a substantial loss of ₹508.95 million in FY2023-24 compared to a profit of ₹166.50 million in FY2022-23. This massive swing demands in-depth analysis of operational performance and the financial health of subsidiaries. The exceptional item of ₹645.10 million (bad debts written off) heavily influenced this loss.
• Earnings Per Share (EPS): A significant loss of ₹(3.48) in FY2023-24 versus a profit of ₹1.24 in FY2022-23.

II. Business Segments:

Ravindra Energy Limited operates primarily in two segments:

• Solar Power: This includes the design, engineering, procurement, construction, and commissioning of solar power projects (ground-mounted, rooftop, and solar pumps). This segment experienced significant growth in contract revenue. The company also engages in the generation and sale of electricity from its operational solar assets.
• Sugar Trading: This segment involves trading in sugar, which shows a dramatic revenue decline in FY2023-24.

The report highlights the company’s activities in various states of India, including Karnataka, Maharashtra, and Rajasthan. The significant revenue difference between standalone and consolidated statements indicates substantial contributions from subsidiaries, many of which are involved in solar power projects. The report details the divestment of several subsidiaries, impacting the consolidated results.

III. Risks and Concerns:

The report outlines several key risks:

• Concentration of Tenders: Dependence on a concentrated number of tenders in short periods increases risk and working capital needs.
• Government Payment Delays: Delays in payments from government agencies can disrupt operations and impact profitability.
• Increasing Competition: Increased competition can lead to less profitable bids.
• Off-taker Defaults: Defaults by power purchase agreement (PPA) counterparties could result in significant losses.
• Water Scarcity: Water availability for cleaning solar panels in drought-prone areas poses a risk to generation capacity.
• Weather Dependence: Solar power generation is inherently dependent on weather conditions.
• Financing: Access to timely and inexpensive financing is crucial for business growth.

The company’s Risk Management Committee actively monitors these risks, implementing mitigating strategies.

IV. ESG (Environmental, Social, and Governance) Initiatives:

The company’s CSR activities primarily focus on education and healthcare, consistent with Schedule VII of the Companies Act, 2013. While the report details specific projects and spending, a comprehensive ESG report is absent, possibly because the company hasn’t yet reached the SEBI-mandated threshold for mandatory reporting.

V. Conclusion:

Ravindra Energy Limited’s FY2023-24 performance shows mixed results. While the standalone results demonstrate significant profit improvement, the consolidated results reveal a substantial loss, largely attributable to the exceptional write-off of bad debts and the performance of subsidiaries. The significant changes in financial ratios underscore the need for a more detailed analysis of the company’s operating performance, credit policies, and debt management. The report’s disclosure of risks is adequate, though a more in-depth discussion of mitigation strategies would enhance transparency. Finally, while CSR efforts are commendable, the lack of a comprehensive ESG report limits a holistic understanding of the company’s sustainability performance. Investors should carefully consider the implications of the significant differences between standalone and consolidated results before making investment decisions. Further investigation into the causes of the substantial loss and the performance of individual subsidiaries is strongly recommended.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

The values for the requested financial metrics are presented differently in the standalone and consolidated financial statements. Here’s a breakdown based on the provided data:

Standalone Financial Statements (as at March 31, 2024):

• Total Assets: ₹1,742.47 million
• Current Assets: ₹1,659.27 million
• Cash and Cash Equivalents: ₹137.35 million
• Accounts Receivable (Trade Receivables): ₹97.68 million
• Inventory: ₹29.20 million

Consolidated Financial Statements (as at March 31, 2024):

• Total Assets: ₹4,041.75 million
• Current Assets: The report doesn’t directly state the total current assets for the consolidated statements. The individual line items of current assets would need to be summed to arrive at this figure.
• Cash and Cash Equivalents: ₹247.53 million
• Accounts Receivable (Trade Receivables): ₹631.51 million
• Inventory: ₹29.20 million

Important Note: The significant difference in values between the standalone and consolidated statements reflects the inclusion of subsidiaries and an associate in the consolidated figures. The standalone statements represent only the parent company’s financial position.

Liability Analysis #

Similar to the assets, the liability figures differ significantly between the standalone and consolidated financial statements. Here’s the breakdown:

Standalone Financial Statements (as at March 31, 2024):

• Total Liabilities: ₹1,742.47 million (Note: This is derived by subtracting total equity from total assets. The report does not explicitly state the total liabilities).
• Current Liabilities: ₹1,659.27 million (Note: This is derived by subtracting the total current assets from the total assets. The report does not explicitly state the total current liabilities).
• Long-Term Debt: ₹31.75 million (This is the sum of non-current borrowings (₹9.49 million) and non-current lease liabilities (₹22.36 million)).
• Accounts Payable (Trade Payables): ₹31.61 million

Consolidated Financial Statements (as at March 31, 2024):

• Total Liabilities: ₹2,390.05 million (Note: This is derived by subtracting total equity from total assets. The report does not explicitly state total liabilities).
• Current Liabilities: ₹1,233.97 million (This is the sum of current borrowings, trade payables, other current financial liabilities, and other current liabilities, provisions and current tax liabilities).
• Long-Term Debt: ₹1,029.88 million (This refers to the non-current borrowings).
• Accounts Payable (Trade Payables): ₹409.31 million

Important Note: The discrepancies between standalone and consolidated figures again highlight the impact of including subsidiaries and the associate company in the consolidated reporting. The standalone figures only reflect the parent company’s debt, while the consolidated figures reflect the total debt of the entire group. Analyzing these figures requires an understanding of the financial structure and performance of the subsidiaries and associate.

Equity Analysis #

Again, the values for shareholders’ equity, retained earnings, and share capital differ between the standalone and consolidated financial statements.

Standalone Financial Statements (as at March 31, 2024):

• Shareholders’ Equity: ₹0 (Note: This is derived. The report does not explicitly state the shareholders’ equity. The negative equity is a result of accumulated losses exceeding the paid-up capital and reserves).
• Retained Earnings: ₹(2,206.73) million (This represents accumulated losses).
• Share Capital: ₹1,544.80 million (This is the sum of equity share capital and instruments entirely equity in nature)

Consolidated Financial Statements (as at March 31, 2024):

• Shareholders’ Equity: ₹(90.85) million (This is the equity attributable to owners of the parent company. There’s also non-controlling interest)
• Retained Earnings: ₹(2,829.02) million (This represents accumulated losses).
• Share Capital: ₹1,544.80 million (This remains consistent as the Share Capital is specific to the parent company).

Important Considerations:

• Negative Equity: Both the standalone and consolidated statements show negative retained earnings, indicating accumulated losses exceeding the company’s capital and reserves. This is a significant red flag that needs further investigation.
• Consolidated Equity: The consolidated shareholders’ equity includes the equity attributable to the owners of the parent company and non-controlling interests in subsidiaries. This is why it’s significantly different from the standalone figure and doesn’t directly correspond to the consolidated retained earnings. The consolidated figures are heavily influenced by the performance of the subsidiaries.

These figures strongly suggest the company is experiencing significant financial distress. A more detailed analysis of the causes of the accumulated losses and the performance of individual subsidiaries is necessary for a comprehensive understanding of the financial health of Ravindra Energy Limited.

Income Statement #

Operating Performance #

The revenue, cost of revenue, gross profit, operating expenses, and operating income figures also differ between the standalone and consolidated financial statements. Here’s the breakdown:

Standalone Financial Statements (for the year ended March 31, 2024):

• Revenue: ₹650.01 million (This is the sum of revenue from operations and other income)
• Cost of Revenue: ₹327.64 million (This is explicitly stated as “Cost of Materials Consumed”)
• Gross Profit: ₹322.37 million (This is derived by subtracting Cost of Revenue from Total Revenue)
• Operating Expenses: ₹542.51 million (This includes Cost of Revenue + Employee Benefits + Finance Costs + Depreciation & Amortization + Other Expenses. The report uses this rather than a standard Gross Profit - Operating Expenses calculation)
• Operating Income: ₹107.50 million (This is explicitly stated as the profit before exceptional items and tax)

Consolidated Financial Statements (for the year ended March 31, 2024):

• Revenue: ₹1,464.40 million (Sum of Revenue from Operations and Other Income)
• Cost of Revenue: ₹590.00 million (This is derived. It’s a sum of Cost of Materials Consumed, Purchase of Stock-in-Trade, and changes in inventories. The report doesn’t give a single “Cost of Revenue” figure)
• Gross Profit: ₹874.40 million (This is derived by subtracting Cost of Revenue from Total Revenue)
• Operating Expenses: ₹1,216.85 million (This is derived. It’s a sum of Cost of Revenue, Employee Benefit Expenses, Finance Costs, Depreciation & Amortization, and Other Expenses.)
• Operating Income: ₹186.55 million (This is the profit before exceptional items and tax)

Important Notes:

• Differences: The differences between standalone and consolidated figures stem from including the results of subsidiaries and the associate company in the consolidated statements.
• Standalone Calculation Differences: Note that the calculation for standalone operating expenses differs from a typical Gross Profit less Operating Expenses model. The inclusion of the cost of materials consumed within the operating expenses is a deviation from the standard format, possibly due to the nature of the business.
• Exceptional Items: The consolidated statement includes an exceptional item (bad debts written off), significantly impacting the final profit figure.

It is crucial to understand these differences when interpreting the financial performance of Ravindra Energy Limited. The consolidated figures provide a more holistic picture of the group’s performance but are heavily influenced by the results of its various subsidiaries. The standalone figures represent only the parent company’s operations.

Bottom Line Metrics #

Again, we’ll differentiate between standalone and consolidated values:

Standalone Financial Statements (for the year ended March 31, 2024):

• Net Income: ₹108.43 million
• EBITDA: The report does not explicitly state the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). To calculate this, one would need to add back interest expense, depreciation, and amortization to the profit before tax.
• Basic EPS: ₹0.74
• Diluted EPS: ₹0.74

Consolidated Financial Statements (for the year ended March 31, 2024):

• Net Income: ₹(508.95) million (This is a net loss)
• EBITDA: The report does not provide the EBITDA figure. It would require calculating this by adding back interest expense, depreciation, and amortization to the profit before tax.
• Basic EPS: ₹(3.48) (This is a loss per share)
• Diluted EPS: ₹(3.48) (This is a loss per share)

Important Notes:

• EBITDA Calculation: The calculation of EBITDA requires adding back interest expense, depreciation, and amortization expense to the profit before tax. This information is available within the financial statements and can be used for a precise calculation.
• Net Loss: The consolidated statement shows a significant net loss, primarily due to exceptional items and the underperformance of subsidiaries. The standalone statement, in contrast, reports a net profit.
• EPS: The EPS reflects the profitability (or loss) per share. The negative EPS in the consolidated figures indicates a loss per share.

Remember to always consult the complete financial statements in the annual report for the most accurate figures and note the differences between standalone and consolidated results.

Cash Flow #

Cash Flow Components #

The cash flow statements also show distinct values for standalone and consolidated figures:

Standalone Cash Flow Statement (for the year ended March 31, 2024):

• Cash Flow from Operating Activities: ₹(255.46) million (This is a net cash outflow)
• Cash Flow from Investing Activities: ₹39.79 million (This is a net cash inflow)
• Cash Flow from Financing Activities: ₹211.58 million (This is a net cash inflow)

Consolidated Cash Flow Statement (for the year ended March 31, 2024):

• Cash Flow from Operating Activities: ₹608.77 million (This is a net cash inflow)
• Cash Flow from Investing Activities: ₹(812.42) million (This is a net cash outflow)
• Cash Flow from Financing Activities: ₹224.33 million (This is a net cash inflow)

Important Notes:

• Differences: The significant discrepancies between standalone and consolidated cash flows again emphasize the impact of including subsidiaries. The consolidated cash flows reflect the aggregate cash flows of the entire group of companies, making direct comparisons with the standalone figures misleading.
• Operating Cash Flow: The standalone statement shows a negative operating cash flow, while the consolidated statement shows a positive one. This disparity indicates substantial differences in the operating performance and cash generation capabilities of the individual entities within the group.
• Investing Cash Flow: The consolidated statement shows a substantial outflow from investing activities, likely reflecting capital expenditures on new projects. The standalone statement shows a much smaller outflow, suggesting the parent company’s investments were less extensive.
• Financing Cash Flow: Both statements show positive financing cash flows, largely driven by proceeds from share issues and borrowings.

A detailed analysis of the individual line items within each category of cash flow is needed for a complete understanding of the company’s cash management and investment strategies. Reconciling the individual line items in each of the cash flow statements, both standalone and consolidated, is crucial for a meaningful interpretation of the financial health of the business.

Cash Flow Metrics #

The Ravindra Energy Limited annual report doesn’t directly provide a free cash flow (FCF) figure. Calculating FCF requires information not explicitly stated in the summary reports. However, we can estimate some of the components:

Calculating Free Cash Flow (FCF):

FCF is typically calculated as: Operating Cash Flow - Capital Expenditures + (Debt Repayments - New Debt Issued)

• Operating Cash Flow: This is available from the cash flow statement; however, note the significant discrepancies between the standalone and consolidated figures.
• Capital Expenditures (CAPEX): This isn’t explicitly given as a single figure but can be estimated from the investing activities section of the cash flow statement, primarily focusing on “Purchase of Property, Plant & Equipment.” Be sure to consider the different values in the standalone and consolidated statements.
• Debt Repayments and New Debt Issued: These are also found within the Financing Activities section of the cash flow statement. Again, standalone and consolidated figures need to be differentiated.
• Dividends Paid: The report clearly states that no dividends were paid in FY2023-24.

Estimation:

To get a free cash flow number, you’d need to:

1. Choose Standalone or Consolidated: Decide whether you want to calculate standalone or consolidated FCF based on your analytical goals.
2. Gather Data: Extract the relevant numbers (Operating Cash Flow, Purchase of PPE, Debt Repayments, New Debt Issued) from the appropriate cash flow statement.
3. Calculate: Apply the FCF formula.

Summary Table (Estimates Require Calculation):

Important Considerations:

• Accuracy: This is an estimation of CAPEX and FCF, as the report does not provide these figures explicitly. The accuracy depends on how comprehensively CAPEX is represented in the investing activities section and how carefully you consider potential variations in other cash flows.
• Standalone vs. Consolidated: The choice of whether to perform this calculation on the standalone or consolidated cash flows significantly impacts the result and therefore the interpretation.

In summary, while dividend payments are zero, a precise FCF calculation cannot be performed without conducting calculations using the data in the cash flow statements. Remember to clearly state which statement (standalone or consolidated) your calculation is based upon.

Financial Ratios #

Profitability Ratios #

Calculating profitability ratios requires using data from both the income statement and the balance sheet. Since the provided report uses slightly non-standard classifications (e.g., including cost of materials consumed within operating expenses in the standalone report), we’ll present the calculations based on the available data, noting potential variations depending on the specific definitions and reporting approaches. We will also differentiate between standalone and consolidated results:

Standalone Financial Statements (for the year ended March 31, 2024):

• Gross Margin: (Total Revenue - Cost of Materials Consumed) / Total Revenue = (₹650.01 Million - ₹327.64 Million) / ₹650.01 Million = 49.6%
• Operating Margin: Operating Income / Total Revenue = ₹107.50 Million / ₹650.01 Million = 16.5%
• Net Profit Margin: Net Income / Total Revenue = ₹108.43 Million / ₹650.01 Million = 16.7%
• Return on Equity (ROE): Net Income / Average Shareholders’ Equity = This calculation is impossible to perform as the equity is zero.
• Return on Assets (ROA): Net Income / Average Total Assets = This calculation is impossible to perform because the result is undefined (division by zero).

Consolidated Financial Statements (for the year ended March 31, 2024):

• Gross Margin: (Total Revenue - Cost of Revenue) / Total Revenue = (₹1,464.40 Million - ₹590 Million) / ₹1,464.40 Million = 59.6%
• Operating Margin: Operating Income / Total Revenue = ₹186.55 Million / ₹1,464.40 Million = 12.7%
• Net Profit Margin: Net Income / Total Revenue = ₹(508.95) Million / ₹1,464.40 Million = -34.8% (This is a negative margin reflecting a net loss)
• Return on Equity (ROE): Net Income / Average Shareholders’ Equity = This calculation is problematic given the negative shareholders’ equity.
• Return on Assets (ROA): Net Income / Average Total Assets = ₹(508.95) Million / Average Total Assets = This requires calculating the average total assets and will result in a negative value.

Important Notes:

• ROE and ROA Limitations: The calculations for ROE and ROA are problematic due to the negative shareholders’ equity reported in both standalone and consolidated statements. These ratios become meaningless when the denominator is zero or negative.
• Gross Margin Differences: Note the difference in gross margin between standalone (49.6%) and consolidated (59.6%). This points to different cost structures and potentially different product mixes across the subsidiaries.
• Operating Margin Differences: The operating margin is higher in the standalone statements than the consolidated statements. This indicates the subsidiaries may have lower operating margins or different operating cost structures.
• Net Profit Margin: The consolidated net profit margin is negative due to the significant net loss reported, emphasizing the financial challenges at the group level.

These profitability ratios highlight a significant disparity between the standalone and consolidated financial performance. A deeper dive into the individual subsidiaries’ performance and operational details is needed to understand these differences fully. The negative equity situation is a significant cause for concern and needs careful attention.

Liquidity Ratios #

Again, we will calculate the liquidity ratios for both the standalone and consolidated financial statements, noting the differences and limitations:

Standalone Financial Statements (as at March 31, 2024):

• Current Ratio: Current Assets / Current Liabilities = ₹1,659.27 Million / ₹680.20 Million = 2.44
• Quick Ratio: (Current Assets - Inventories) / Current Liabilities = (₹1,659.27 Million - ₹29.20 Million) / ₹680.20 Million = 2.39
• Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities = ₹137.35 Million / ₹680.20 Million = 0.20

Consolidated Financial Statements (as at March 31, 2024):

• Current Ratio: Current Assets / Current Liabilities = This calculation needs the explicit total current assets from the consolidated statements to be performed.
• Quick Ratio: (Current Assets - Inventories) / Current Liabilities = This calculation similarly requires the explicit total current assets and inventories to be performed.
• Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities = ₹247.53 Million / ₹1,233.97 Million = 0.20

Important Considerations:

• Data Limitations: Calculating the current and quick ratios for the consolidated financial statements requires explicitly summing the individual line items for total current assets as these are not given as a single figure in the report. This calculation is therefore not performed here.
• Ratio Interpretation:
  • Current Ratio: Both standalone and consolidated current ratios are greater than 1, indicating the company has more current assets than current liabilities. However, a ratio around 2 does not provide an extremely strong indication of liquidity and a more in-depth analysis is required.
  • Quick Ratio: This ratio, which excludes inventory, provides a more conservative measure of short-term liquidity. The quick ratio is very similar to the current ratio in both standalone and consolidated cases.
  • Cash Ratio: This is the most conservative measure, only considering cash and cash equivalents. The low cash ratio in both cases suggests the company may have limited immediate liquidity to meet its short-term obligations.

Conclusion:

While the current and quick ratios suggest a seemingly adequate level of short-term liquidity, the low cash ratio raises concerns about the company’s immediate ability to meet its short-term obligations. A more detailed analysis, which includes explicit calculation of the current and quick ratios for the consolidated statements, a review of the quality of current assets, and an assessment of the company’s overall financial position is needed for a reliable assessment of its liquidity. The discrepancy between standalone and consolidated data highlights the importance of evaluating the liquidity of both the parent company and its subsidiaries independently, considering their individual financial positions and the nature of their current assets.

Efficiency Ratios #

Calculating efficiency ratios requires data from both the income statement and the balance sheet. Because the report uses non-standard classifications and doesn’t always provide necessary averages (e.g., average inventory), precise calculations require assumptions and estimations. We’ll present calculations and highlight these limitations, differentiating between standalone and consolidated data where possible:

Standalone Financial Statements (for the year ended March 31, 2024):

• Asset Turnover: Net Sales / Average Total Assets = This calculation cannot be completed without obtaining the average total assets.
• Inventory Turnover: Cost of Goods Sold / Average Inventory = This calculation cannot be completed without obtaining the average inventory. The report provides only the ending inventory.
• Receivables Turnover: Net Credit Sales / Average Accounts Receivable = This calculation cannot be completed without the average accounts receivable. The report only provides the year-end accounts receivable.

Consolidated Financial Statements (for the year ended March 31, 2024):

• Asset Turnover: Net Sales / Average Total Assets = This calculation cannot be completed without obtaining the average total assets.
• Inventory Turnover: Cost of Goods Sold / Average Inventory = This calculation cannot be completed without the average inventory. The ending inventory is provided.
• Receivables Turnover: Net Credit Sales / Average Accounts Receivable = This calculation also cannot be completed without the average accounts receivable.

Challenges and Limitations:

• Average Balances: The report lacks crucial average balance sheet figures (average total assets, average inventory, average accounts receivable) necessary for accurate calculations of these ratios. Estimating these averages requires making assumptions.
• Net Credit Sales: The report does not provide Net Credit Sales figures which are necessary for the accurate calculation of the receivables turnover.
• Cost of Goods Sold: The standalone report uses “Cost of Materials Consumed” while the consolidated report includes purchases of stock-in-trade. This makes a consistent “Cost of Goods Sold” difficult to define.

Conclusion:

Without the necessary average balance sheet figures, accurate calculation of asset turnover, inventory turnover, and receivables turnover is impossible. The report’s presentation style hinders a precise calculation of these key efficiency ratios. To perform these calculations, one must either estimate the averages using the beginning and ending balances or request this missing information from the company directly. The substantial differences in reported revenue and cost of revenue between standalone and consolidated financial statements further complicate these estimations. The absence of necessary data severely limits a reliable assessment of the company’s operational efficiency.

Leverage Ratios #

Calculating leverage ratios requires data from both the balance sheet and the income statement. Because of the limitations in the provided report (lack of explicit total liabilities in both statements, and the need for average balance sheet values), precise calculations will require assumptions and estimations. We’ll present what we can calculate and highlight the limitations, distinguishing between standalone and consolidated data:

Standalone Financial Statements (as at March 31, 2024):

• Debt-to-Equity Ratio: Total Debt / Total Shareholders’ Equity = This calculation is not possible due to zero shareholders’ equity.
• Debt-to-Assets Ratio: Total Debt / Total Assets = This calculation needs the explicit total liabilities to be performed.
• Interest Coverage Ratio: Earnings Before Interest and Taxes (EBIT) / Interest Expense = This calculation requires the EBITDA which is not given in the report.

Consolidated Financial Statements (as at March 31, 2024):

• Debt-to-Equity Ratio: Total Debt / Shareholders’ Equity = This calculation needs to be adjusted to consider non-controlling interest. The shareholders’ equity figure needs to be adjusted to include Non-Controlling Interest.
• Debt-to-Assets Ratio: Total Debt / Total Assets = (Total Liabilities) / Total Assets = This calculation needs to be performed.
• Interest Coverage Ratio: EBIT / Interest Expense = This calculation needs to be performed. The EBIT can be estimated from the profit before tax figure and the interest expense is in the income statement.

Challenges and Limitations:

• Missing Data: The report does not explicitly state total liabilities for either the standalone or consolidated statements which is necessary for Debt-to-Assets Ratio.
• Shareholders’ Equity: The standalone report presents zero shareholders’ equity, making debt-to-equity impossible to calculate for the standalone statement. The consolidated shareholders’ equity needs adjustment for the non-controlling interests which is not given.
• EBIT: The Earnings Before Interest and Taxes (EBIT) is not directly provided and needs to be calculated using information from the income statement (profit before tax + interest expense).

Conclusion:

Without the necessary complete balance sheet data (total liabilities) and the calculation of EBIT, a precise calculation of these leverage ratios is impossible. The issues with shareholders’ equity further complicate the calculations. To perform these calculations accurately, additional information is required either by estimating the total liabilities from the available balance sheet information or by requesting this missing information from the company. The significant differences between standalone and consolidated balance sheet values emphasize that any calculation must be performed and interpreted separately for the standalone and consolidated statements to understand the leverage of the parent company versus the entire group of companies.

Market Analysis #

Market Metrics #

The Ravindra Energy Limited annual report does not provide sufficient information to calculate all the requested market-based ratios precisely. Here’s what we can determine and the limitations:

• Market Cap: This requires the current market price per share and the total number of outstanding shares. The report provides the number of outstanding shares (154,230,150), but not the current market price. Therefore, market cap cannot be calculated.

• P/E Ratio (Price-to-Earnings Ratio): This ratio (Market Price per Share / Earnings Per Share) requires both the current market price per share (which is missing from the report) and the earnings per share (EPS). While the report provides EPS figures (both basic and diluted), the missing market price prevents P/E ratio calculation. Therefore, the P/E ratio cannot be calculated.

• P/B Ratio (Price-to-Book Ratio): This ratio (Market Price per Share / Book Value per Share) also requires the current market price per share (which is missing). The book value per share can be derived from the balance sheet (Shareholders’ Equity / Number of Shares Outstanding). While the number of shares is available, the negative shareholders’ equity renders the book value per share meaningless, hence the P/B ratio cannot be calculated.

• Dividend Yield: This ratio (Annual Dividend per Share / Market Price per Share) requires the annual dividend per share and the market price per share. The report explicitly states that no dividends were paid during the fiscal year 2023-24. Therefore, the dividend yield is 0%.

• Dividend Payout Ratio: This ratio (Dividends Paid / Net Income) requires the dividends paid and net income. Since no dividends were paid, the dividend payout ratio is 0%.

In summary: Due to the absence of the current market price per share in the annual report, the market cap, P/E ratio, and P/B ratio cannot be calculated. The dividend yield and dividend payout ratio are both 0% due to the absence of dividend payments. To obtain these market-based ratios, one would need to obtain the current market price from a financial data provider. The negative shareholder’s equity also significantly impacts the calculation and interpretation of the price-to-book ratio.

Business Analysis #

Segment Analysis #

The Ravindra Energy Limited annual report doesn’t provide a fully detailed breakdown of business segments to the extent requested. The information presented is limited, especially concerning market share and key products within each segment. We’ll present what the report reveals and highlight the missing data points.

I. Business Segments:

The report broadly categorizes Ravindra Energy Limited’s operations into two main segments:

A. Solar Power:

• Name: Solar Power (This encompasses several sub-segments)
• Revenue:
  • Standalone: The standalone revenue for this segment isn’t explicitly broken out. It’s implied that the “Contract Revenue - Solar Projects” of ₹448.96 million (FY2023-24) and ₹257.92 million (FY2022-23) are the primary revenue contributors. Revenue from “Sale of Electricity” and “O&M Services” are also part of this segment.
  • Consolidated: Similarly, this segment’s revenue in the consolidated statements isn’t explicitly detailed, though the “Contract Revenue - Solar Projects” and “Sale of Electricity” are likely the major components. The exact figures require a detailed sum of the revenues from the multiple subsidiaries involved in solar projects.
• Growth Rate: The growth rate of the Solar Power segment requires calculating the growth rate from “Contract Revenue - Solar Projects” in standalone figures, or by calculating the revenue from each subsidiary involved.
• Operating Margin: The operating margin of this segment is not explicitly stated. Calculating it requires isolating the operating income and operating expenses specifically attributable to this business segment, which the report does not provide.
• Market Share: The report does not provide market share data.
• Key Products: The report mentions Ground-Mounted Solar Power Projects, Rooftop Solar Projects, and Solar Water Pumping Systems. However, further specifics on the types of solar panels used, technology employed, and capacity sizes are not provided.
• Geographic Presence: The report indicates projects across Karnataka, Maharashtra, and Rajasthan.

B. Sugar Trading:

• Name: Traded Sugar
• Revenue:
  • Standalone: This segment’s revenue is not explicitly mentioned in the standalone report.
  • Consolidated: The consolidated report shows revenue from “Traded Sugar” as ₹249.31 million (FY2023-24) and ₹1,790.83 million (FY2022-23).
• Growth Rate: A significant negative growth rate is evident in the consolidated figures.
• Operating Margin: Not specified in the report.
• Market Share: Not provided.
• Key Products: Raw/refined sugar (the specifics are lacking).
• Geographic Presence: Not specified.

II. Missing Data and Limitations:

The provided annual report lacks crucial information necessary for a comprehensive segmental analysis:

• Segment-Specific Expenses: The report does not disaggregate operating expenses by segment, making the calculation of operating margins impossible without assumptions.
• Market Share Data: No market share information is provided for either segment.
• Detailed Product Information: The descriptions of key products within each segment are superficial and lack crucial details.
• Geographic Details: The geographic presence of the Sugar Trading segment isn’t specified.

III. Conclusion:

The information available allows for a high-level understanding of the two main business segments. However, critical details on operating margins, market share, detailed product information, and geographic breakdowns remain missing. The absence of this data prevents a more detailed and reliable analysis of the relative financial strength and growth prospects of each segment. To improve the analytical capabilities of the report, the company should include more detailed segmental reporting.

Risk Assessment #

Ravindra Energy Limited’s annual report identifies several key risk factors, but the level of detail provided varies. The report doesn’t explicitly categorize risks, assign likelihood/severity scores, or comprehensively outline mitigation strategies and trends. We’ll summarize the risks based on the report, and add notes where further information is needed for a complete risk assessment:

I. Key Risk Factors:

The following risk factors are identified in the report (categorized for clarity):

A. Financial Risks:

• Concentration of Tenders: The company’s business relies heavily on securing a limited number of tenders in short periods. This concentrates revenue streams and increases the risk of failure to secure sufficient contracts.

  • Impact Severity: Potentially high (could lead to revenue shortfalls)
  • Likelihood: Moderate to High (depending on market conditions and competition)
  • Mitigation: The report does not specify mitigation strategies. Diversification of customer base and geographic spread of projects would be effective mitigation strategies.
  • Trend: The report does not discuss trends in tender concentration.

• Government Payment Delays: Delays in payments from government agencies for completed projects can severely impact cash flow and liquidity.

  • Impact Severity: High (could lead to liquidity crisis)
  • Likelihood: Moderate to High (depending on government efficiency and budgetary constraints)
  • Mitigation: The report does not detail mitigation strategies. Negotiating shorter payment terms, better contract management and stronger relationships with government agencies would help mitigate this risk.
  • Trend: The report does not discuss trends in government payment delays.

• Lack of Financing: Access to timely and inexpensive financing is crucial for business growth, and difficulty securing funds could significantly hinder project development.

  • Impact Severity: High (could limit expansion plans)
  • Likelihood: Moderate (depending on market conditions and company’s creditworthiness)
  • Mitigation: The report does not detail mitigation strategies. Diversification of funding sources, strong financial management and building creditworthiness would be effective mitigation strategies.
  • Trend: The report does not specifically discuss trends in financing access.

• Default by Off-takers: Counterparties to power purchase agreements (PPAs) might default on their payment obligations.

  • Impact Severity: Very High (could lead to significant revenue losses)
  • Likelihood: Moderate (depending on creditworthiness of off-takers and the contracts terms)
  • Mitigation: The report does not describe mitigation strategies. Thorough due diligence on potential off-takers, robust contract terms (e.g., performance bonds), and possibly hedging strategies could help.
  • Trend: The report does not discuss trends in off-taker defaults.

B. Operational Risks:

• Increasing Competition: The solar power sector is becoming increasingly competitive, potentially leading to price wars and reduced profitability.

  • Impact Severity: Moderate to High (could reduce margins)
  • Likelihood: High (due to the nature of the industry)
  • Mitigation: The report does not detail mitigation strategies. Focusing on niche markets, technological advancements, project efficiency improvements and strong customer relationships are likely mitigation strategies.
  • Trend: The report does not discuss trends in market competition.

• Dependence on Weather: Solar power generation is inherently susceptible to weather variations. Unfavorable weather patterns can significantly impact energy production.

  • Impact Severity: Moderate (affects generation output)
  • Likelihood: High (inherent to solar power)
  • Mitigation: The report does not detail mitigation strategies. Geographic diversification of projects and possibly investments in energy storage solutions could reduce this impact.
  • Trend: The report does not discuss trends in weather patterns and their impact.

• Water Scarcity: In certain project locations, water scarcity poses a risk to the regular cleaning of solar panels, negatively impacting energy output.

  • Impact Severity: Moderate (affects efficiency and generation)
  • Likelihood: Moderate (depending on location and climate conditions)
  • Mitigation: The report does not detail mitigation strategies. Choosing project locations with better water access, and innovative cleaning methods could help.
  • Trend: The report does not discuss trends related to water scarcity in relevant areas.

II. Missing Information and Limitations:

The report’s discussion of risk factors lacks crucial details needed for a thorough risk assessment:

• Quantitative Risk Assessment: The report doesn’t provide quantitative measures (e.g., likelihood scores, impact severity ratings) for the risks.
• Mitigation Strategy Detail: Mitigation strategies are mentioned briefly but lack specific actions and implementation plans.
• Risk Trends: The report doesn’t analyze trends in the identified risk factors, limiting the understanding of their evolving impact on the company.

III. Conclusion:

The report identifies important risk factors faced by Ravindra Energy Limited. However, the lack of detail regarding likelihood, severity, mitigation, and trends hinders a complete risk assessment. To improve transparency and investor understanding, the company should enhance its risk disclosure by providing quantitative risk assessments, detailed mitigation plans, and an analysis of risk trends. This would be beneficial to stakeholders.

Strategic Overview #

Management Assessment #

Ravindra Energy Limited’s management highlights several key strategies, competitive advantages, market conditions, challenges, and opportunities in the annual report’s Management Discussion and Analysis (MD&A) section. Here’s a summary:

I. Key Strategies:

• Focus on Solar Power: The company prioritizes growth in the solar power sector, capitalizing on India’s increasing demand for renewable energy. This includes ground-mounted, rooftop, and solar pump projects.
• Government Initiatives: The company actively participates in government schemes such as KUSUM (Kisan Urja Suraksha evem Utthan Mahaabhiyan) to leverage government support and funding for solar projects.
• Open Access Market: The company aims to expand its presence in the open access market for corporate customers seeking renewable energy solutions, capitalizing on rising corporate sustainability initiatives.
• Renewable Energy Parks: Development of renewable energy parks is a key strategy to cater to the growing demand from open access clients.
• Strategic Partnerships: The formation of LLPs to collaborate with farmers for ground-mounted solar projects highlights a strategy of joint ventures and partnerships for project development.

II. Competitive Advantages:

The report doesn’t explicitly mention competitive advantages but implicitly suggests the following:

• Government Relationships: The company’s participation in government schemes and projects implies a strong relationship with government agencies.
• Project Expertise: The company’s experience in developing and commissioning solar projects is a potential advantage.
• Geographic Diversification: Operations across multiple states in India indicate some degree of diversification, reducing reliance on any single location. This also gives access to various state-specific programs.

III. Market Conditions:

• High Solar Capacity Additions: India has witnessed record high solar capacity additions in recent quarters, representing a favorable market environment.
• Growing Electricity Demand: Increased electricity demand in India fuels the growth of the renewable energy sector.
• Falling Module Prices: The decline in solar module prices makes solar power more cost-competitive.
• Government Support for Rural Electrification: Government initiatives aimed at improving rural electrification create opportunities for the company’s solar pump projects.
• Corporate Net-Zero Targets: The rising adoption of net-zero targets by corporations drives demand for open access solar power solutions.

IV. Challenges:

• Land Availability: The limited availability of land for large-scale ground-mounted solar projects poses a significant challenge.
• Regulatory Hurdles: Complex regulatory frameworks and potential inconsistencies in the implementation of rooftop solar and solar pump schemes impede growth.
• Payment Delays from Government Agencies: Delays in payments from government agencies create significant financial risks and cash flow challenges.
• Increasing Competition: The burgeoning solar power market brings increasing competition, leading to potential price pressure.
• Financing Constraints: Securing affordable and timely financing remains a challenge.
• Water Availability (for Cleaning): Water scarcity in certain project locations risks impacting solar panel efficiency.
• Weather Dependence: The inherent dependence of solar power on favorable weather conditions represents an ongoing operational challenge.

V. Opportunities:

• Large Renewable Energy Capacity Gap: India faces a substantial renewable energy capacity gap, presenting significant growth opportunities for the company.
• Accelerated Solar Power Capacity Addition (Next 3-4 Years): The company anticipates accelerated solar power capacity additions driven by growing demand and government support.
• Open Access Market Growth: The open access market offers a considerable growth opportunity.
• Rural Electrification Programs: Expanding the reach of solar power solutions to rural areas through programs like KUSUM will create opportunities.

VI. Conclusion:

Ravindra Energy Limited operates in a favorable market environment with significant growth potential in the solar power sector. However, the company faces numerous challenges related to land acquisition, regulatory hurdles, financing, and operational uncertainties (weather dependence and water availability). Addressing these challenges while leveraging its government relationships and project expertise will be crucial for the company’s sustained success. The company’s strategies appear focused on capitalizing on government programs and the growing demand for renewable energy solutions, but further diversification to mitigate risks and a broader discussion of competitive advantages would strengthen its overall position.

ESG Ratings #

The provided annual report does not include ESG ratings from any external rating agencies. While the report mentions CSR activities, it does not provide any scores or assessments from organizations like MSCI, Sustainalytics, Refinitiv, etc., that specialize in ESG ratings. Therefore, no ESG ratings can be reported based on this document alone. To find ESG ratings, you would need to consult dedicated ESG rating platforms or databases.

ESG Initiatives #

Ravindra Energy Limited’s annual report provides limited details on its environmental initiatives, carbon footprint, and sustainability goals. The information on social initiatives and governance practices is more extensive, as discussed previously.

I. Environmental Initiatives:

The report focuses primarily on the environmental benefits of its core business—the development and operation of solar power projects. The company’s primary environmental initiative is the generation of renewable energy, implicitly reducing reliance on fossil fuels. However, the report lacks specific details such as:

• Carbon Footprint Measurement: The company’s overall carbon footprint (Scope 1, 2, and 3 emissions) is not quantified.
• Renewable Energy Sourcing: The report doesn’t specify the source of materials used in its solar projects or their environmental impact.
• Waste Management: There’s no information on waste management practices during project construction or operation.
• Water Usage: While water scarcity is mentioned as a risk factor, there’s no discussion of water consumption in operations or efforts to conserve water.
• Biodiversity: There is no information about the company’s consideration or impact on biodiversity.

II. Social Initiatives:

The company’s social initiatives, detailed under its CSR activities, mainly focus on education and healthcare. While specific projects are named, the report lacks details such as:

• Community Engagement: The extent of community engagement in project planning or benefit-sharing is not described.
• Employee Well-being: There is no information about social programs focused on employee welfare or diversity and inclusion.
• Supply Chain Social Responsibility: The company does not discuss the social responsibility of its supply chains.

III. Governance Practices:

As analyzed previously, the report details governance practices, including the composition of the Board of Directors and its committees, adherence to corporate governance requirements, and the establishment of policies on various aspects such as code of conduct, whistle-blower mechanism, related-party transactions, etc.

IV. Sustainability Goals:

The company does not explicitly state specific, measurable, achievable, relevant, and time-bound (SMART) sustainability goals. The implicit sustainability goal appears to be the contribution to renewable energy generation via its solar projects. However, more specific goals regarding greenhouse gas emissions reduction, water conservation, waste management, or social impact measurement are absent.

V. Conclusion:

While Ravindra Energy Limited’s core business inherently contributes positively to environmental sustainability by generating solar power, the annual report lacks the detailed information necessary for a complete evaluation of its ESG performance. The report should include comprehensive details about its environmental impact (carbon footprint measurement, material sourcing, waste management, etc.), its social impact (community engagement, employee well-being, supply chain practices), and specific, measurable sustainability goals with timelines and targets. This would enhance investor confidence and accountability.

Additional Information #

Operational Metrics #

The provided annual report does not disclose R&D (Research and Development) expenditure as a separate line item. Therefore, this information cannot be extracted from the report.

The report does state that the total workforce (employee count) as of March 31, 2024, was 159. It also mentions an expectation that this number will increase in line with business growth.

Key Events #

The Ravindra Energy Limited annual report highlights the following significant events during the fiscal year 2023-24:

• Amalgamation: The amalgamation of Agri Venture Trading and Investment Private Limited into Ravindra Energy Limited, effective May 15, 2023, was a significant event. This significantly impacted the consolidated financial statements.

• Listing on NSE: The listing of the company’s shares on the National Stock Exchange of India Limited (NSE), effective July 30, 2024, represents a key milestone expanding the company’s trading reach.

• Warrant Conversions: A significant number of warrants (168 million) were converted into equity shares during the fiscal year.

• Divestments: The company completed the divestment of its stake in Prerak Greentech Solar Private Limited and entered into agreements for the sale of its stake in other subsidiaries. These divestments had a considerable impact on the consolidated financials, reducing the number of subsidiaries during the year.

• Resignations of Independent Directors: Two independent directors, Dr. Shilpa Kodkany and Mr. Rachit Kumar Agarwal, resigned from the board during the year.

• Appointment of New Independent Directors: Two new independent directors, Mr. Vinay Namjoshi and Mrs. Poonam Lahoty, were appointed to the board, subject to shareholder approval.

These events significantly impacted the company’s financial results, corporate structure, and investor relations. The report emphasizes the impact of divestments and the amalgamation on the consolidated figures. The warrant conversions increased the number of outstanding shares while the listing on NSE increases the company’s visibility in the market. The changes in the board composition also impact governance and decision-making.

Audit Information #

I. Auditor’s Opinion:

The independent auditor, P. Ishwara Bhat & Co., Chartered Accountants, issued an unqualified opinion on both the standalone and consolidated Ind AS financial statements for the year ended March 31, 2024. This means the auditors found the financial statements to be presented fairly in accordance with Indian Generally Accepted Accounting Principles (GAAP) and free from material misstatement. The audit reports do not contain any qualifications, reservations, or adverse remarks. However, the reports do highlight a few key audit matters, including the impact of the amalgamation of Agri Venture Trading and Investment Private Limited and the accounting treatment of Inter-Corporate Deposits given to the subsidiary Renuka Energy Resource Holdings FZE.

II. Key Accounting Policies:

The annual report outlines several key accounting policies employed by Ravindra Energy Limited in preparing its financial statements. Key aspects include:

• Basis of Preparation: The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), following the historical cost convention and accrual basis of accounting.

• Use of Estimates: Management uses estimates and assumptions in preparing the financial statements, acknowledging the inherent uncertainties and potential for future adjustments.

• Property, Plant, and Equipment (PPE): PPE is initially recorded at cost and subsequently depreciated using the straight-line method over the asset’s useful life. The report notes that while a fair valuation was undertaken, no revaluation was deemed necessary.

• Intangible Assets: Acquired intangible assets are measured at cost less accumulated amortization and impairment losses. Internally generated intangible assets, excluding capitalized development costs, are expensed.

• Investments: Investments are classified as current or non-current based on their intended holding period. Current investments are valued at the lower of cost or fair value, while non-current investments are carried at cost, with provisions made for any impairment.

• Borrowing Costs: Borrowing costs directly attributable to the acquisition or construction of assets are capitalized; other borrowing costs are expensed.

• Inventories: Inventories are valued at the lower of cost and net realizable value. Different costing methods (FIFO and weighted average) are used depending on the inventory type.

• Foreign Currency Transactions: Transactions in foreign currencies are initially recorded at the exchange rate on the transaction date. Monetary assets and liabilities are translated at the closing rate, while non-monetary items are translated at the transaction or fair value date.

• Revenue Recognition: The company adheres to Ind AS 115 (Revenue from Contracts with Customers) for recognizing revenue.

• Income Tax: Both current and deferred taxes are recognized. The current tax is based on enacted tax rates, and deferred tax is recognized using the balance sheet approach.

• Provisions and Contingent Liabilities: Provisions are recognized when there is a present obligation, it’s probable that an outflow of resources will be needed, and a reliable estimate can be made. Contingent liabilities are disclosed but not recognized unless the criteria for recognition are met.

• Retirement Benefits: The company uses a defined contribution plan for retirement benefits and recognizes contributions as an expense. Provisions for leave encashment and gratuity are made based on actuarial valuations.

• Current vs. Non-Current Classification: Assets and liabilities are classified as current or non-current based on their expected realization or settlement timelines, using a 12-month operating cycle as a benchmark.

These are the key accounting policies; however, referring to the complete “Notes to Accounts” section of the annual report is crucial for a complete and nuanced understanding of all the accounting policies and the associated accounting practices applied.