Energy Efficiency Services (EESL) proposes to tap the stock exchanges in the next fiscal and offload 20 per cent of its equity. “We hope to raise ₹200 crore through the IPO considering that the paid-up capital of EESL will be ₹1,000 crore by then,” said Saurabh Kumar, Managing Director of EESL.
EESL is a joint venture of four public sector enterprises - NTPC, PFC, REC and PowerGrid. The current paid-up capital of the company is ₹460 crore and “we have come out with a rights issue to our promoters which will help enhance the paid-up capital,” Kumar told BusinessLine .
The company works out its investment cycle differently. “We had a rolling cycle two years ago. It keeps changing because we keep on adding new things. We feel interventions are necessary and at times the government nudges us to go where we are going. We have put together an investment programme, in consultation with the World Bank. It is about $5 billion in the next four years which comprises many things, including LED bulbs, street lamps, smart meters, electric vehicles and also bringing solar power to agriculture,” he said.
The success of EESL came through implementation of the LED bulb programme. But it has its dose of challenges, including non-availability and pricing, black marketing and sale of lower-standard bulbs. “There is no subsidy in the LED programme that we run. It is merely the power of aggregation and bulk procurement that has driving down costs. The costs in the open market have also come down substantially. Three years ago, the 7 watt bulbs were costing around ₹600. Now the maximum amount that a manufacturer takes is ₹120-130 a piece,” Kumar said.
Defending the concept, he said, “If you look at the volume growth in the LED industry, this year about 25 crore LED bulbs have been sold by the private sector. And we have sold just about seven crore. So, the growth has been largely led and propelled by the private sector. Nobody has brought to our notice that our bulbs are being resold. Even if you hypothetically presume that 50 per cent of the seven crore has been resold, it doesn’t explain why 25 crore has been sold by the private sector.”
The government recently raised customs duty on LED products. “If you look at the cost structure of an LED bulb, only 10-12 per cent is now imported, which is the LED wafer. Everything else is made here. So, I think, it’s a step in the right direction where the government is making sure that you are able to manufacture these things in India. Because we are able to sell at ₹70 and the others are selling at slightly higher price, there is a bit of an arbitrage and you need not pass on these very small amounts for the custom duty increase to the consumer.”
EV programme
On the Electric Vehicle programme, Kumar said: “Nothing is wrong (with the programme). This is the first time procurement of electric vehicles has taken place anywhere in the world. We put together a specification which was based on the government specifications for e-vehicles. We try to make the specifications as open as possible so that it does not preclude anyone.”
Kumar negates any talk of delay in delivery of EVs. “There is no delay. We are an aggregator for multiple government arms and each operates at a certain pace. We want to have the charging infrastructure in place before the vehicles are delivered. There are currently 100 electric vehicle charging points in Delhi. Another 25 will be functional by the end of this week. They will be sufficient to service the demand from the 300 vehicles that we will deliver in Delhi in the first tranche,” Kumar said.
He agrees that the electric vehicle programme cannot move forward without amending the Electricity Act. But, for now, EESL is restricting itself to providing vehicles to the government.
The company hopes to expand its base in this segment in the future. “Not necessarily the fleet ownership, but the charging infrastructure, because it offers a very large opportunity and we do not expect the private sector to jump in immediately for the next two-three years. This is because the demand for the EVs and charging infrastructure is going to pick up after a few years when there are a large number of players in the market,” he pointed out.