Suryachakra Power Corporation is entering the capital market on 25th June 2007 with a public issue of 3.40 crore equity shares of Rs.10 each in the band of Rs.17 to Rs.20 per share.
The company is a tiny power generation player, presently operating a thermal based power plant of 20 MW at Andaman and Nicobar island. Since it began its operations in April 2003, the financial performance of the company is pathetic to say the least. The total net profit made by the company during the last four years was Rs.5.30 crores on a total income of Rs.309 crores and that too on investments of Rs.80 crores. The capacity utilisation of the plant was at 62.15% in FY07, it's highest ever. Obviously, it is very difficult for a Diesel Generating Power House to make profit!
Reliance Energy erected the plant; Caterpillar Commercial Pvt. Ltd. did Operations and Maintenance and IOC supplied HSD. So what is the expertise or managerial input of the company? That's why the annual staff cost is just Rs.78 lakhs. 81% of realisation goes for feed stock while 13% for interest and depreciation. Thus the company is left with just 6% to play on. Maybe, not satisfied with being a mere diesel power plant, the company is now focussing on bio-mars power projects. Again small projects - with 4 power projects of 10 MW each, at four locations. All these projects are being set up by three wholly owned subsidiaries at total project cost of Rs.168.27 crores, which is being financed with equity of Rs.55-98 crores and term loan of Rs.112.29 crores. Debt equity ratio stands at 2:1.
On a consolidated basis, the company will have a debt in excess of Rs.150 crores, with equity of Rs.76.63 crores. The new projects being set up in Chattisgarh, Raipur, Parbhani and Amravati, will go on stream in September 07 and September 08.
Considering the business models of the company, having tiny capacity at different locations, it can never earn respectable profit and even servicing and repayment of debt would become a difficult task for the company. On top of it, huge equity base of Rs.76.63 crores would be just too difficult to service. Even in the past, two companies of the group were de-listed and have received show cause notice from SEBI.
Straight advice - avoid the issue.