India's middle class is estimated to be 300 million in size. A majority of this middle class will be in top 55 cities over the next 15 years and these people will require electricity. The total power generation capacity of the country is 300 gigawatt (GW) and only 13 percent of the country's power generation is met through renewable energy. Of that, 13 percent solar energy constitutes about 8GW of capacity, which is roughly 3 percent of the overall power generation of India. Companies wish to enter the solar power generation business because of the tax break provided by the government and the $100-billion investment expected to come in by 2020 to take the solar power generation capacity to 100GW over the next decade.
With this as the hypothesis IIT engineer Himamsu Popuri started Nuevosol Energy Private Limited in 2011, which in five years has crossed Rs 180 crore in annual revenues. Nuevosol builds solar mounting systems and structures for energy companies. This meteoric rise of Himamsu was clearly because he was able to tap into all the investments going into solar business. More importantly, industries setting up solar farms were looking for consultants who could explain by execution why mounting of the solar panel structures is far more important than just laying it on the field. "I was working on the corporate side of a solar energy company when people began to get confused over setting up solar panels across India. It was early days and most were paying big money to understand solar energy," notes Himamsu.
The early days
It was while graduating in 2009 from IIT-Madras did Himamsu find an interest in solar energy. He was picked by Solar Semi-conductors, a manufacturing comany as an engineer. Within a year he joined Cirus Solar where he learned the ropes of setting up complete solar photo voltaic installations. While in that company he realised a business opportunity. "People did not realise the positioning based on the movement of the sun allows the business to capture the most energy; the mounting of the structures are also dependent on the soil types," explains Himamsu. This was knowledge that became a business opportunity. When he started the company in 2011 the fact that several solar installations ignored basic work was brought to the fore. "We work with most EPC (engineering, proc urement, construction) companies and real estate companies to provide a turnkey solar solution for solar on the DC side, meaning we help them capture usable power by setting up our structures," say Himamsu.
His first break came when a small engineering company asked him to set up a 1MW solar structure outside of Hyderabad. Since, he has 55 clients, including Azure Power, Tata Power, Sterling Wilson , ACME and Lanco, and has built 1GW worth of solar projects.
The business was set up with an investment of Rs 50 lakh (raised from friends and family) and since it is a straight cash business because of the nature of large corporate contracts Himamsu has been able to reinvest cash to run the business after that initial support.
The business model
The company works on a per-MW basis charge or 1.5 percent of the total cost per MW. To set up 1MW of solar power a company spends anything between Rs 6 and 8 crore. The EBITA (earnings before interest, taxes and amortisation) for this business ranges from eight to 12 percent and works on low net margins.
Nuevosol takes time-bound turnkey contracts from infrastructure companies, which usually last for three to four months. Infrastructure companyies work with Nuevosol to understand the lay of the land and the number of solar panels that can be set up in the area. Himamsu's team quickly works out the cost per structure and gets all the steel mounts manufactured and shipped to location, where his team then helps the infrastructure company to assemble the panels on the mounts. In some cases they install trackers on the panels to move based on the sun's movement to gain maximum power. Nuevosol is now a 250-member team and expects it's revenues to hit Rs 500 crore in three years.
"These are ideas that are scaled sheerly because of the entrepreneurs ability to find an opportunity which was largely undiscovered," says Sridhar Pinnapureddy, founder of CtrlS, the data centre company.
The competition for Nuevosol are the myriad private contractors and engineers that claim to understand the solar business. The opportunity does not stop there for Nuevosol. Himamsu now has plans to design and execute rooftop projects for large corporates. Today, an average corporate pays Rs 12 per unit of power and solar is one way to be self-reliant energy-wise and reduce grid and wheeling charges. Himamsu's company has set up the rooftop solar for companies like Infosys (in Hyderabad) and the Oberoi Group of Hotels.
"India needs energy and such companies that organise the unorganised in the engineering sector are very valuable," says Mohandas Pai, MD of Aarin Capital.
Himamsu credits the successful establishment of Nuevosol and its seamless functioning to his friends and colleagues who were also the founding team of the company. Nikhil Babu (Director- Design), Sriram (Director- Strategy), Harish (Director-Projects) and Srinivas (Director - Operations) joined him in 2011, and decided to make solar energy plant construction an organised business. The future is in renewable energy and Himamsu has played the right notes to become a Rs 1,000-crore company in a decade.