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Kiran Energy Solar Power, ReNew Power Ventures and Bharat Light & Power make headway in the renewable energy sector
Three leading lights of India Inc have found a second wind with their renewable energy start-ups. ET digs deeper into the plans of these professionals-turned-entrepreneurs searching for their place in the sun.
RAYS OF SUNSHINE
He came to India with a foreign venture, and then went on to take an Indian enterprise into foreign lands. In 1998, a 35-year-old Englishman helped the Hong Kong-headquartered Jardine Matheson Group set up its Indian operation. Six years later, the man who was a special advisor to former British prime minister John Major, joined the Tata group with a mandate to globalise it.
After leaving the Tatas in 2009, Alan Rosling today is at ease in India. "Where in the world will you find entrepreneurs of the kind that exist here? India is where the growth is and the opportunities are," says Rosling, who first visited India three decades ago when he was a student at Cambridge.
It was one of India's many professionals-turned-entrepreneurs who convinced Rosling to go down the same road. Three years ago, Ardeshir Contractor, a former head of KPMG's investment banking activities in India, who was blueprinting a solar energy start-up, drew Rosling into the project. Today, the 49-year-old British citizen is chairman & executive director of Kiran Energy Solar Power (KESP), and Contractor its MD & CEO.
KESP has set up 25 MW of capacity across Gujarat and Rajasthan. Another 50 MW will be up and running in Rajasthan by year-end. The plan is to go up to around 250 MW by 2014, making KESP one of the largest solar power companies in the Asia-Pacific region, says Vishal Gupta, partner at Bessemer Venture Partners, a private equity (PE) firm that has invested in KESP. Two notable players in this space who have received venture investment are SunSun Lighting and Aegis Petro of China.
In 2010, three PE funds—New Silk Route, Bessemer and Argonaut—nvested $45 million in KESP; a year later the trio put in another $10 million. Together, they hold nearly 80 per cent stake in KESP, reveals an investor who did not want to be named. Most of the balance is held by Contractor and Rosling. The management team holds a small stake too, says the same investor requesting anonymity. Contractor declines to divulge the shareholding pattern. "It's not public," was his response.
"KESP was among the early movers in this sector, with aspirations to become one of the leading solar power developers," says Darius Pandole, partner at New Silk Route Advisors. "Contractor and Rosling constituted a qualified and credible team." That could translate into a leadership position. It has also developed strong relationships within the industry—as is evident in a joint venture with the Mahindra group—adds the New Silk Route partner.
Mahindra Solar One, in which KESP owns 76 per cent and the Mahindra group the rest, gives Rosling and Contractor credibility to talk to banks. External funding doesn't come easy to start-ups that do not have a big balance sheet to lean on. Banks and financial institutions in India are more willing to finance, say, a road project than a solar power unit. KESP, however, has managed to raise money from domestic lenders like State Bank of India and IDFC as well as foreign institutions like IFC, US Exim and DEG.
Backed by a government subsidy and abundant availability, the solar energy sector promises to grow fast in India. Capacity is expected to go up to 22 Gigawatt (1 GW is equal to 1,000 MW) by 2022, predicts a Care Research report dated June 19. Some estimates are even more optimistic. Rosling says the capacity may go to 25 GW by 2020 if the government's goal to produce 3 per cent of power from solar is fulfilled. Curent capacity in India is 1 GW.