About Chamunda Electricals Limited

Business Overview

Chamunda Electricals specializes in the operation and maintenance of substations up to 66 KV, testing and commissioning of electrical substations up to 220 KV, and the development of solar power generation parks with a capacity of 1.5 MW. The scope of services includes the erection of EHV class equipment, structures, earthing systems, control cable works, and associated infrastructure for substations up to 220 KV (D Class).

The company’s ability to deliver customized solutions tailored to client needs has established a strong reputation, attracting prominent clients across industries. A focus on nurturing long-term client relationships and understanding evolving requirements ensures the delivery of holistic services and the identification of new collaboration opportunities.

With the growing potential of renewable energy, particularly solar energy in India, Chamunda Electricals has established a 1.5 MW solar power generation plant at Survey No. 1085, Village Bhatib, Taluka Dhanera, District Banaskantha, Gujarat. The project is backed by a 25-year Power Purchase Agreement (PPA) with Uttar Gujarat Vij Company Limited, underscoring the company’s commitment to sustainable energy solutions.

As at December 31, 2024, the Company have 637 permanent employees. The Banker to the Company is Bank of Baroda.

Industry Analysis

Indian Power Sector
Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy. The fundamental principle of India’s power industry has been to provide universal access to affordable power in a sustainable way. The Ministry of Power has made significant efforts over the past few years to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network, and achieving universal household electrification.

India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power, to viable non-conventional sources such as wind, solar, agricultural, and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

With a generation capacity of 442.85 GW, India is the third-largest producer and consumer of electricity in the world. Although power generation has grown more than 100-fold since independence, growth in demand has been even higher due to accelerating economic activity. India's energy firms have made significant progress in the global energy sector. According to the S&P Global Platts Top 250 Global Energy Rankings 2022, Oil and Natural Gas Corp. Ltd. ranked 14th. In June 2021, the Export-Import Bank of India (Exim Bank) announced that it has extended a line of credit (LOC) worth US$ 100 million to the Sri Lankan government for the purpose of funding projects in the solar energy sector and assuring that the country’s 70% power requirements are met by renewable energy sources by 2030.

India's power generation witnessed its highest growth rate in over 30 years in FY23. Power generation in India increased by 8.87% to 1,624.15 billion kilowatt-hours (kWh) in FY23. In FY24 (until January 2024), the power generation in India was 1,452.42 BU. During FY10-FY23, electricity generation in India increased at a CAGR of 4.75%. In the Union Budget 2022-23, the government allocated Rs. 7,327 crore (US$ 885 million) for the solar power sector including grid, off-grid, and PM-KUSUM projects.

For FY24, the electricity generation target from conventional sources has been fixed at 1,750 BU, comprising 1,324.11 BU of thermal energy, 156.70 BU of hydro energy, 46.19 BU of nuclear energy, 215 BU of RES (excluding hydro), and 8 BU to be imported from Bhutan. India's power consumption grew over 8% to 127.79 BU in February 2024 as compared to the year-ago period, according to government data. The Nathpa Jhakri Hydro Electricity Station of Satluj Jal Vidyut Nigam (SJVN) has set a new monthly power generation record, increasing from 1,213.10 million units to 1,216.56 million units on July 31, 2021.

India’s Renewable Energy Industry
India's energy demand is expected to increase more than that of any other country in the coming decades due to its sheer size and enormous potential for growth and development. Therefore, most of this new energy demand must be met by low-carbon, renewable sources. India's announcement India that it intends to achieve net zero carbon emissions by 2070 and to meet 50% of its electricity needs from renewable sources by 2030 marks a historic point in the global effort to combat climate change. India was ranked fourth in wind power capacity and solar power capacity, and fourth in renewable energy installed capacity, as of 2023. Installed renewable power generation capacity has increased at a fast pace over the past few years, posting a CAGR of 15.4% between FY16 and FY23. India has 125.15 GW of renewable energy capacity in FY23. India is the market with the fastest growth in renewable electricity, and by 2026, new capacity additions are expected to double.

With the increased support of the Government and improved economics, the sector has become attractive from an investor’s perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role.

As of March 2024, Renewable energy sources, including biomass, waste to power and waste to energy, have a combined installed capacity of 143.64 GW. As of February 2024, 42.25% of the total power installed capacity is from non-fossil-based sources. India's installed renewable energy capacity is expected to increase to about 170 GW by March 2025 from the level of 135 GW as of December 2023, according to research agency ICRA. The country is targeting about 450 Gigawatt (GW) of installed renewable energy capacity by 2030 – about 280 GW (over 60%) is expected from solar. The non-hydro renewable energy capacity addition stood at 4.2 GW for the first three months of FY23 against 2.6 GW for the first three months of FY22. According to research by the Council on Energy, Environment and Water's Centre for Energy Finance (CEEW-CEF), India's total installed power generation capacity reached 416 GW in FY23, of which 125 GW (30%) came from renewable energy (RE) and 47 GW (11%) comes from hydro.

The electricity generation target (Including RE) for the year 2023-24 has been fixed as 1750 billion Units (BU). i.e. growth of around 7.2% over the actual generation of 1624.158 BU for the previous year (2022-23). The generation during 2022-23 was 1624.158 BU as compared to 1491.859 BU generated during 2021-22, representing a growth of about 8.87%. The installed solar energy capacity has increased by 26 times in the last 9 years and stands at 73.32 GW as of December 2023. In 2023, India has added 7.5 GW of solar power capacity. During January 2024, the capacity addition from solar energy stood at 9008.47 MW.

Solar power accounted for 16.9% of the total installed power capacity and 40.1% of the total installed renewable capacity at the end of December 2023. Solar power's share increased by 0.3% from the last quarter, when it accounted for 39.5% of the total renewable capacity. India has hydroelectric power projects with a total capacity of 15 GW under construction, which will increase the country's total hydro capacity from 42 GW to 67 GW by 2031-32, supported by IMD's prediction of higher rainfall and the government's proactive stance towards accelerated hydropower development. India has generated 75.57 BU of solar power in the first eleven months of FY24. Power generation from renewable energy sources (not including hydro) stood at 22.41 billion units (BU) in January 2024, down from 25.79 BU in January 2023. India added a record 18.48 GW of renewable energy capacity in 2023-24, a 21% increase over the previous year. Power generation from renewable energy sources stood at 309.66 billion units (BU) between April-January 2024, down from 316.75 BU in the same period in the previous year. With a potential capacity of 363 GW and with policies focused on the renewable energy sector, Northern India is expected to become the hub for renewable energy in India.

Business Strengths

1. Over a Decade of Industry Experience and Strong Execution Capabilities
With more than 10 years of industry experience, Chamunda Electricals has established itself as a reliable and competent player in the market. The company has a proven track record of delivering high-quality services and solutions across complex projects, particularly in the power sector. Specializing in EHV (Extra High Voltage) class equipment, the company has successfully executed numerous Erection, Testing, and Commissioning projects for substations of varying capacities. Additionally, expertise in substation Operation and Maintenance (O&M) ensures sustained performance, reliability, and efficiency of critical infrastructure.

2. Strong Promoters and Board of Directors Supported by Experienced Senior Management
The company is backed by strong promoters and a skilled Board of Directors, who provide strategic direction and ensure alignment with long-term goals. The Board comprises experienced professionals with expertise in finance, operations, strategy, and industry-specific knowledge, enabling informed decision-making and effective risk mitigation.

3. Advanced Testing and Commissioning Equipment with a Skilled Workforce
Chamunda Electricals utilizes advanced and modern equipment for the testing and commissioning of substations and power-related projects. This, combined with a highly skilled workforce, ensures precision, reliability, and adherence to the highest industry standards.

4. Scalable Business Model with a Strong Work Order Book
The company has developed a scalable business model, leveraging expertise in the operation and maintenance (O&M) of 77 substations and testing services. This focus highlights technical prowess, deep industry knowledge, and provides a competitive edge in the market.

Business Strategies

1. Expanding Focus on EHV Erection, Testing, and Commissioning
Chamunda Electricals is strategically enhancing its service portfolio by intensifying its focus on EHV (Extra High Voltage) Erection, Testing, and Commissioning. This move targets the growing demand for advanced electrical infrastructure, particularly in large-scale industrial and utility projects requiring robust high-voltage systems.

2. Establishing a NABL-Certified Lab with Advanced Equipment
The company is investing in advanced equipment imported from a leading MNC manufacturer to set up a NABL-certified lab at its Surat branch. This initiative aims to enhance testing and certification capabilities, ensuring compliance with the highest industry standards. The in-house lab will streamline quality assurance processes, attract prominent clients, and improve competitiveness while maintaining sustainable profit margins by reducing reliance on external testing services.

3. Geographical Expansion and Customer Base Diversification
Chamunda Electricals is focused on expanding its geographical footprint and diversifying its customer base. By entering new markets across different regions, the company aims to reach a wider audience, reduce location dependency, and leverage its expertise in power infrastructure solutions to serve a diverse range of clients.

4. Enhancing Operational Controls for Optimal Resource Utilization
The company is committed to improving operational controls and cost efficiencies through optimal resource utilization and service quality. Measures include deploying skilled professionals, adopting industry best practices, and providing employee training to ensure the delivery of high-quality services, leading to improved profitability and operational efficiency.

Business Risk Factors and Concerns

1. Revenue Dependency on Operation, Maintenance, Testing, and Commissioning of Electrical Substations
A significant portion of revenue, accounting for 85.45%, 96.38%, 92.78%, and 97.22% for the periods ending December 31, 2024, Fiscal 2024, 2023, and 2022 respectively, is derived from Operation, Maintenance, Testing, and Commissioning of Electrical Substations. Any inability to adapt to evolving customer preferences, ensure project quality, or secure projects from government agencies could adversely impact business operations, financial condition, and cash flows. Risks such as longer execution periods, material cost fluctuations, delays in clearances, and cost overruns further exacerbate this dependency. While no disruptions have occurred in the past three fiscals, future instances cannot be ruled out.

2. Concentration Risk from Top Ten Customers
The top ten customers contribute 100% of revenue for the periods ending December 31, 2024, and Fiscal 2024, 2023, and 2022. Loss of business from one or more of these customers could significantly impact revenue and profitability. Although the company maintains long-term relationships with these customers, there is no assurance that these relationships will continue or that the same level of business will be generated. No such disruptions have occurred in the past three years.

3. Geographical Concentration in Gujarat
The majority of revenue is derived from operations in Gujarat, contributing 84.97%, 85.64%, 86.64%, and 100% for the periods ending December 31, 2024, and Fiscal 2024, 2023, and 2022 respectively. Any adverse developments, such as policy changes, economic volatility, or restrictive regulations in Gujarat, could severely impact the company’s financial condition. No such instances have occurred in the past three years.

Chamunda Electricals faces risks due to its heavy reliance on Operation, Maintenance, Testing, and Commissioning of Electrical Substations, which contributes the majority of its revenue. Additionally, the company’s dependence on its top ten customers and geographical concentration in Gujarat pose significant risks to its revenue and profitability. While no disruptions have occurred in the past three years, these risks highlight the need for diversification and adaptability to sustain long-term growth.