Luminous Power Technologies, a wholly owned subsidiary of Schneider, recently inaugurated a solar panel factory in Rudrapur, Uttarakhand. The factory has been launched with a capacity of 250 MW, which is expandable up to 1 GW. With this development, Luminous has taken a strategic business decision to evolve from manufacturing products in the solar, inverter and battery categories to building an end-to-end solar energy management ecosystem.
The factory is spread over 10 acres. It is fully automated and equipped with the latest manufacturing technologies and full robotic automation capabilities to manufacture solar modules. The Luminous solar solutions ecosystem will be integrated with the Connect X App, which offers customers information on real-time energy consumption and monitoring, solar energy generation and inverter performance. Luminous Power Technologies had launched the Connect X App in 2023 at the Renewable Energy India Expo.
To evaluate new solar module technologies, Luminous has forged a strategic partnership with the University of New South Wales, Australia. The Rudrapur plant can manufacture polycrystalline, monocrystalline, n-Type and Topcon panels, both mono facial and bi facial with options to adapt from 5BB to 16BB. Luminous primarily aims to sell its solar panels for the rooftop (residential, commercial and industrial) and decentralised markets. The solar facility will also host a state-of-the-art PV module performance efficiency and reliability evaluation lab, which has the potential to get NABL accreditation in the future.
“India has made a remarkable progress in the development of solar power capacity in recent years. The Indian government has taken a lead role, particularly with the introduction of the Pradhan Mantri Suryodaya Yojana, which aims to provide solar rooftop to 10 million households. The Luminous solar PV panel facility embodies our commitment to the vision of Atmanirbhar Bharat. This factory is a significant step towards achieving the collective goal of Schneider and Luminous to promote net zero practices and sustainable energy solutions. With this state-of-the-art facility, Luminous is well positioned to further accelerate its solar business, given India’s evolving renewable energy market,” says Manish Pant, chairman, Luminous board, and executive vice president – international operations, Schneider Electric.
Financial performance
Luminous Power Technologies is a leading player in the domestic power solutions market, offering inverters and batteries under its renowned brand, Luminous. The company has maintained its strong position in the inverter segment and ranks among the top two in the battery segment, according to CRISIL ratings. Luminous Power Technologies’ extensive distribution network, comprising over 1,500 distributors and around 35,000 dealers nationwide, supports its strong market presence. In fiscal 2023, north India accounted for approximately 50 per cent of the company’s sales. In the first nine months of calendar year 2023, the power solutions business contributed 85 per cent of the company’s sales, while international business and other business accounted for 7 per cent and 8 per cent respectively.
According to data released by CRISIL ratings in February 2024, the operating revenue of Luminous Power Technologies grew by approximately 15 per cent in fiscal 2023, driven by its entry into new overseas markets and new product launches. The operating margin rose to approximately 15 per cent in fiscal 2023 from approximately 13 per cent in fiscal 2022, riding on cost reduction through continuous re-engineering of products and due to operating leverage. The margin is expected to be 14-15 per cent over the medium term. The company had a revenue of Rs 32.74 billion and an operating margin of 14.5 per cent in nine months of fiscal 2024.
CRISIL ratings reported that for the period ended March 31, 2023, the company reported a revenue of the Rs 42.51 billion, a significant increase from Rs 37.06 billion in the previous year. The profit after tax (PAT) also grew from Rs 2.61 billion in 2022 to Rs 3.54 billion in 2023. The PAT margin improved from 7.1 per cent to 8.3 per cent during the same period.
The company’s financial position remained strong, with the adjusted debt/adjusted net worth ratio decreasing from 0.06 in 2022 to 0.03 in 2023. The interest coverage ratio increased from 75.6 times in 2022 to 93 times in 2023. This indicates that the company has a strong capacity to service its debt and cover interest expenses from its earnings.
Apart from introducing solar modules in its product offerings, the company is also planning to introduce a new range of integrated power solutions featuring lithium-ion batteries. Although these batteries are approximately three times more expensive than lead-acid batteries, they offer more than twice the lifespan, resulting in a lower overall cost of ownership for consumers.
The company’s financial risk profile is strong, underpinned by negligible debt (as of December 2023) and healthy profitability. This translates to robust debt protection metrics, healthy return on capital employed and a net worth of Rs 17.24 billion as of March 31, 2023. The company is expected to undertake capital expenditure of Rs 2 billion-Rs 2.5 billion per annum. However, steady cash generation, prudent working capital management and funding of capex are likely to maintain the company’s strong debt protection metrics.
The company is expected to maintain a robust liquidity position in the medium term, primarily driven by the anticipated annual cash accrual, which is projected to be between Rs 3 billion and Rs 4 billion. Additionally, as of December 31, 2023, Luminous Power Technologies had cash and equivalents exceeding Rs 5.38 billion. While the company has access to a fund-based limit of Rs 5.5 billion, over 12 months leading up to October 2023, less than 10 per cent of that limit was utilised. Moreover, the company has no long-term debt on its balance sheet, which further strengthens its financial position.
Going forward, the company’s internal accrual is expected to be sufficient to meet its capital expenditure and working capital requirements, indicating a healthy financial outlook for Luminous Power Technologies.
Risks and future outlook
Despite its positive financial performance and metrics, several risks loom for the company. CRISIL ratings point out that Luminous Power Technologies faces challenges in maintaining its operating margin due to fluctuations in prices of key raw materials such as lead, steel, electronics and aluminium, which constitute a significant portion (65-70 per cent) of the total raw material cost. Intense competition in the market has also led to increased advertising, discounts and selling expenses in recent years.
The demand for inverters and batteries is seasonal, peaking during summer months when power cuts are more frequent. As a result, sales are concentrated in the last quarter of the fiscal year (ending in March) and the first quarter of the following fiscal year (ending in June), with relatively lower sales during the rest of the year. The company is likely to remain vulnerable to volatility in raw material prices and selling expenses in the medium term due to limited flexibility in passing on price increases to customers, given the highly competitive market.
The inverter and battery segment are highly competitive, with numerous unorganised and regional players. However, the implementation of the GST has significantly reduced the pricing advantage enjoyed by unorganised players, benefiting organised players such as Luminous Power Technologies.
Despite these risks and challenges, it is positive that the company is diversifying its product offerings with solar modules, primarily following the recent big policy impetus given to promote setting up of residential rooftop solar projects. Luminous Power Technologies seeks to benefit from residential solar customers purchasing solar modules, inverters and batteries from the same company. To this end, the recent inauguration of the solar manufacturing facility in Rudrapur will help the company improve its financials even further. “The solar panel factory in Rudrapur is a step forward for Luminous towards playing a bigger role in India’s road to net zero. Our investment in this new manufacturing facility underscores our unwavering dedication to fostering sustainable practices and reducing the carbon footprint. Solar will be a significant part of our business and we see it as a major growth enabler as we aim to double our growth in the next three years. We believe that solar is the future and as the demand for clean energy sources continues to rise, we are committed to being a leading company in this energy transformation journey,” says Preeti Bajaj, managing director and chief executive officer, Luminous Power Technologies.
