Overview
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ICRA Nepal Limited (ICRA Nepal) has assigned “IPO Grade 4+”, indicating below average fundamental, to the proposed Initial Public Offerings (IPO) of Ngadi Group Power Limited.
Note: ICRA Nepal assigns IPO grading on a scale of IPO Grade 1 to IPO Grade 5, where Grade 1 indicates strong fundamentals and Grade 5 indicates poor fundamentals.
The grading of 4+ indicates a grading one notch higher than 4.
Introduction of Ngadi Power Company Ltd.
Company Profile
Ngadi Group Limited was incorporated as a private limited company on Falgun 9, 2062 and was later converted into a public company as Ngadi Group Ltd. on Jestha 25, 2071.
The company has its registered headquarters in Hanumanthan, Anamnagar, Kathmandu. The company has 92 promoters.
The company has invested Rs.32.94 million in other hydroelectricity projects and plans to increase it to Rs.40 million.
Operations
The company has completed constructing SiuriKhola Small Hydropower Project (5 MW) located in Bhulbhule VDC of Lamjung district. The power generated by the project is being evacuated through a 33KV transmission line to a switching station at Nyadi, Lamjung 8 KM away.
A Power Purchase Agreement (PPA) with an installed capacity of 990 kW with Nepal Electricity Authority (NEA) was completed in 2006. However, this was later changed to accommodate the upgraded size of the project from 990 kW to 5000 kW on February 2008. The project began commercial operations from 2069/6/30.
According to the PPA signed with NEA, the project’s annual electricity production is 32,100,409 kWh. The project’s electricity production in the rainy season is 25,421,686 kWh and in the dry season is 6,678,723 kWh. Further, any excess energy produced by the company shall be purchased by the NEA.
NEA will purchase electricity in the rainy season at Rs.4.80 per kWh and in the dry season at Rs.8.40 per kWh. This purchase rate will increase by 3% annually for five years from the commercial date of operation. The company obtained power generation licencefrom GoN Ministry of Energy on 2066/5/30 and the license will expire on 2101/5/29.
Capital Structure
The company has an authorized capital of Rs.667 million. Its issued capital is Rs.486.87 million. The company’s promoters have already invested Rs.340.81million and the remaining Rs.48.69 million is to be collected from the project affected locals and Rs.97.37 million from the general public through IPO.
Board of Directors
The company has 4 members in its Board.
- Bhogendra Kumar Guragain, Executive Chairperson (Representative of Highland Holdings Pvt. Ltd.)
Academic Qualifications:M.B.B.S/ M.Sc
Work Experience:Dr. Guragain is a founding director at Sunrise Bank Ltd. He has had 8 years of experience in the banking industry. He is also a director in Barun Hydropower Company Ltd. and Executive Chairaman at SN Power Pvt. Ltd.
- SailendraGuragain, Managing Director
Academic Qualifications:M.Sc. in Engineering/ M.B.A.
Work Experience:Mr. Guragain was chairman at Arun Valley Hydropower Development Company Ltd. from 2000 to 2010. He is also director a SN Power Pvt. Ltd. and Riverfalls Hydropower Development Pvt. Ltd. He is also the vice precident of Independent Power Producers’ Association Nepal (IPPN) and member at FNCCI, Nepal Engineers’ Association and Nepal Engineering Council.
- Dinesh Gurung, Director
Academic Qualifications:Bachelors
Work Experience:Mr. Gurung has 10 years of experience in real estate and banking sector of Nepal.
- Rabin Subedi, Director
Academic Qualifications: Bachelors
Work Experience: Mr. Subedi has 7 years of experience in management related activities.
Managing Director
Mr. Sailesh Guragain, Managing Director
Mr. Shailendra Guragain, 48 has graduated
M. Sc. In Engineering from Ivanovo State University of Chemical Technology, Russia and graduated in MBA from Pokhara University, Nepal. Mr. Guaragain has also worked on soil and ground water quality in OMEHAM Amsterdam and Chemilinco Engineering in The Netherlands -1993.
Mr. Guragain is a leading hydropower developer and financial expert who has managed various Hydropower companies for the last 20 years.
- Chairman - Barun Hydropower Company Ltd. (HewaKhola Hydropower project 4.5 MW)
- Chairman - Arun Valley Hydropower Development Company Limited (Piluwa HP Project 3 MW) - from 2000 to 2010.
- Chief Executive Officer – Nyadi Group Limited (SiuriKhola Small Hydropower Project 5.0 MW)
- Director - SN Power Pvt. Ltd.(Super Nyadi Hydropower Project 40.27 MW)
- Directors- Riverfalls Hydropower Development Pvt. Ltd.
Also, Mr. Guragain has a lot of experience of social work as the member of the following associations.
- Vice President –Independent Power Producers’ Association Nepal (IPPAN)
- Executive Member of Small Hydro Power Association Nepal
- Member: FNCCI, Energy Committee
- Member: Chamber of Commerce, Energy Committee
- Member: Nepal Engineers’ Association
- Member: Nepal Engineering Council
- Life Member: Mitra Khunja
Analysis
Financial Highlights
All the financial data in this section have been derived directly from the IPO Announcement Notice published by the company. The presented data and real life performance of the company may vary.
Financial Highlights
In FY 2071/72, Ngadi Group Power Ltd.(NGPL) posted net profit of NPR 72.6 million over gross sales of NPR 179.86 million and operating profit of NPR 158.3 Million. The increment of profit in FY 2071/72 was on account of receipt of arrears from NEA amounting to Rs 37.70 million, towards electricity sales made in FY 2069/70 and 2070/71.
EPS of NGPL in FY 2072/73 goes down to Rs 8.1 then the EPS in FY 2071/72 of Rs 21.31. This fall in EPS by 163% is due to increase in company’s shareholder after IPO. The average EPS of hydropower companies (as per Q2 2072/73) is Rs 8 whereas the average price in this sector is Rs 600.
The IPO fund is likely to be used in balancing the leverage (reducing the long term borrowing). The immediate return to the shareholders will be from the revenue of Siuri Khola Hydro Power Project. Company will generate static income unless it proceeds to any other new project.
The reputation of promoter group and their prior experience in the hydro development in Nepal is the positive factor for this company
Company’s overall financial performances are good.IPO has always been priority investment in Nepal in current bullish market. This IPO will attract many investors.
