Ratul Puri is a man in a hurry. His single-point agenda: To exorcise the ghosts of past failures and salvage his credibility and business. And, so far, he has made some rapid strides. Within six years of entering the power generation business with Moser Baer Projects—it was renamed Hindustan Powerprojects Pvt Ltd (HPPPL) late last year—he has emerged as the man behind the largest solar power generator in the country. The entrepreneur has earned the grudging respect of his peers and competitors, many of whom expected him to fail in his latest venture. But not everyone is singing his accolades, not yet anyway. Investors have yet to forget Puri’s first business foray when, under the aegis of his father’s company, Moser Baer India Limited (MBIL), he started manufacturing solar panels only to see the venture flounder.
Puri, however, is confident that history will not repeat itself. In his latest endeavour, the 42-year-old Delhi-based HPPPL chairman is working at breakneck speed to cash in on the early-mover advantage in the renewable energy sector: He is among the first to set up solar plants across India, in Tamil Nadu, Gujarat, Rajasthan and West Bengal, among other states.
Since the launch of his company in 2008, Puri has commissioned 400MW-worth of solar power projects (250MW for India and the rest for overseas). The aim is to generate 5,000MW of energy by 2017.
HPPPL’s first thermal project will be operational later this year. He is also building hydropower assets and has taken the first steps in wind power. That’s not all: Puri wants to develop another 6,100MW of power generation capacity using conventional (thermal) and non-conventional (solar, wind, hydro) energy sources in the long term.
The company’s solar business alone generated Ebitda, or earnings before interest, tax, depreciation and amortisation, of Rs 500 crore in FY2014 on revenues of Rs 900 crore. When the first phase of the thermal asset becomes operational later this year, he expects HPPPL’s Ebidta to increase to nearly Rs 3,500 crore by FY2016.
Puri is investing Rs 35,000 crore towards all these projects by 2017: By the end of FY2014, HPPPL would have put in Rs 20,000 crore, and will raise the remaining Rs 15,000 crore over the next three years. If the company meets its deadlines, it will probably be the first private or government undertaking in India to generate more than 1GW of solar energy.
“By opting for solar power for short term, thermal for mid term and hydro power for long term, the company has aligned itself with India’s power generation strategy,” says Puri, who has set a brutal pace for himself and HPPPL.
Once Bitten, But Not Shy
The pace of work is similar to what Puri had followed in his first avatar as a second-generation entrepreneur when he entered Moser Baer India Ltd—the once-iconic media storage company founded by his father Deepak Puri. He joined MBIL in 1994 as general manager for business development, and was appointed executive director in 2001, by which time Moser Baer’s CDs and other optical media storage devices were a household name.
From 2000 to 2004, MBIL’s revenues jumped from Rs 154 crore to Rs 1,501 crore, and profits rose about eight times to Rs 323 crore. The company became the world’s second largest optical media manufacturer. But even at the height of its success, MBIL was aware of the Chinese threat. Deepak Puri saw his business impacted by the government-supported manufacturing prowess of Chinese companies. Technology, too, was changing at a speed that was impossible for MBIL to match.
The junior Puri then began his search for the next big thing. In 2005, he convinced MBIL’s board of directors that manufacturing solar panels was the future. Over the next three years, MBIL would invest over Rs 3,000 crore—a considerable amount given that the company’s revenues were Rs 1,343 crore in 2005— in setting up facilities to manufacture crystalline silicon and thin-film panels and buying the required technology.
On the family front, in 2010, the Puris divided their assets in a non-acrimonious settlement: While Deepak Puri, later aided by his daughter Sabena (who runs a restaurant called Junoon in California), would look after MBIL, Ratul got sole proprietorship of Moser Baer Projects (now HPPPL). In 2012, he resigned from MBIL and severed all ties with his father’s company. MBIL has no stake in HPPPL. The separation was complete, but MBIL’s lenders and investors felt they had been short-changed and saddled with a debt-ridden company especially because Ratul, who was one of the main promoters for the solar panel venture, was no longer a part of MBIL.
Puri is optimistic about his father’s business. These days, though, he’s immersed in HPPPL’s success. Rather than manufacturing solar panels, he’s setting up power plants, and is determined to prove his naysayers wrong.
At the time Puri constructed his first 5MW solar project in Tamil Nadu in 2010, it cost Rs 20 crore to produce one mega watt of energy. Today, it costs about Rs 7-8 crore per MW.
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(This story appears in the 19 September, 2014 issue of Forbes India. To visit our Archives, click here.)
As mentioned by Ratul, u buy moserbaer panels for your solar projects amongst other manufacturer at arms length and market competive pricing. I have gone through your wesbite where you have mentioned technology name whereever you have used moserbaer panels and whereever you source panels from other foreign panels you have posted their names of the company. Would you like to clarify ? also the upcomming project list of 13 project is still upcomming since 3 years... kinldy update the website as u do you regulary your blogs/wiki & twitter...on Apr 16, 2015
\"Puri, however, is confident that history will not repeat itself. In his latest endeavour, the 42-year-old Delhi-based HPPPL chairman is working at breakneck speed to cash in on the early-mover advantage in the renewable energy sector: He is among the first to set up solar plants across India, in Tamil Nadu, Gujarat, Rajasthan and West Bengal, among other states. -------- You were also early mover in renewable manufacturing ie. Solar Cell/Panels and would always hype about you being the biggest manufacturer in India and are you doing same for your power business now ? - Found this old link Senior Puri with Akhil Gupta http://www.livemint.com/Companies/nCGpmW4cIZJ8uc0bpegnjI/Blackstone- Group-invests-300-mn-in-Moser-Baer.html \"Solar panel manufacturing remains one of MBIL\'s core businesses even though the company last reported a profitable year in 2007. Its media storage and entertainment businesses have declined in share, but according to industry experts, they are still performing better than solar panel units\" - This Article --------- Earlier Article - \"Back in Greater Noida at Moser\'s manufacturing facility, things are quiet. This solar photovoltaic unit isn\'t producing much. And that\'s how it has been for the last two years. But the unit in Noida continues to churn out CDs/DVDs to meet whatever demand that exists. Another official who moved out of the company early this year from the human resources department says, \"For the last three to four months nobody is going to the plant. They are not getting any salary. The last I heard is that the Noida plant will be shifted to Greater Noida. And the land in Chennai which was bought in 2008 for expansion of Moser\'s solar business has been lying barren for the last four years.\" What about the business of selling movie CDs and DVDs which Moser Baer had entered with a lot of fanfare and so-called disruptive business model by selling them at ridiculously cheap prices? \"That business is finished. It ended a year or so back,\" says the official\" - Earlier Article In many ways, then, HPPPL is Puri in his 2.0 version. This time around, his investors are happy with him. - What about the Moser baer Investor ? (on what happened with the solar manufacturing business in Moser Baer). But both SBI Macquarie and Blackstone India put the blame on the \"global environment\" for the business failure. \"It was not run down due to mismanagement,\" adds Goyal. Does Puri think he was responsible for the problems at Moser Baer? In a moment of reflection, he accepts that \"a good manager\" should anticipate how the industry will behave in the future. But then he gets defensive: \"It was very difficult to anticipate the kind of overbuild that happened in the sector. In a matter of three years, the Chinese manufacturers of solar panels had built a capacity of 40GW and accounted for nearly three-fourth of the demand. Global production over-capacity was 151 percent in 2009.\"------ One can accept it to a certain level - Now that many major Global Power Developer Who also happen to be biggest Solar Manufacter - i.e Sunedison / First Solar / Renesolar / Hareon etc have started bidding in india solar Misson ... the Threat continues since they have there manufacturing as well as developing capabilties and competing with india developers ... In an email to Forbes India, Ratul Puri\'s spokesperson responded to these allegations: \"Promoters\' personal guarantee has been provided that is how company is still functioning%u2026 The restructuring of Moser Baer India Limited was based on a techno-economic valuation study which was conducted by an independent third party consultant appointed by the Central Bank of India. The company had executed the Master Restructuring Agreement%u2026 and also fulfilled pre-required conditions for implementation of the CDR Scheme.\" - This is true but the promoters happen to be senior puri not ratul puri as per the BSE Disclouser and procedding in the court judgement in which prefrential shares is been alotted to Senior Puri and the fund would be used for working captital of MBI. Comparing yourself with indosolar - An Industry Veteran comparing himself with a newbie - why not compare yourself with Private unlisted companies Lanco / Tata Solar / Vikram Solar ??? All this are doing great.. Its share price has risen from a low of Rs 1.5 in August 2013 to Rs 7 a year later. MBIL\'s share price has also gone up from Rs 2.30 to Rs 9.9 during the same period. Let also compare the Lifetime High and Low ???? and calculate the Percentage as well ... It could be by design or just a stroke of luck, but the disadvantage at MBIL is now working in Puri\'s favour in HPPPL. He sources solar panels from his father\'s company, among others; he says that it is through competitive pricing, but declined to give details ------ hope it reflects in MBI results A successful and oversubscribed IPO will vindicate Puri and validate his roller-coaster journey --------- But can Puri wipe off the memory of Moser Baer India Limited, the company that his father built from scratch, from the mind of the investors, especially public investors? At some point Moser Baer Projects will go for a listing. Puri will want to now build a business that will reclaim his father\'s legacy and redeem his own. Yes, hurry Ratul Puri... Yes, hurry Ratul Puri....on Sep 23, 2014
Well two things simply show through to anyone who can read between the lines. The writer apparently misses them somehow. First - Moser Baer was brought down by both its core market of CDs/Dvds literally evaporating due to pendrives/external hard disks/internet based sharing & finally cloud. If they would have moved into making pendrives that business might have done well. Anyways, that business was doomed as competing with chinese manufacturers meant building gigantic scale. And moser baer built scale to be lowest cost player. But in a tech market where product itself changes radically in 2 yrs time, scale while providing massive edge once, now proves to be a liability, all that debt weighing down business. Second was ofcourse solar panel manufacturing, again scale here moving against them as everybody built scale leading to excess capacity and crashing prices and massive losses. Don\'t forget similar thing happened in optic fibre cables business in early 2000s, so much capacity created those guys are still struggling to recover from it. In a way this build capacity before demand to achieve scale and lower cost is very similar to the Reliance model, but where reliance core business of refining and petrochemicals has remained quite similar even after 3 decades, moser baer business changed many times over in just 3 years. If the underlying technology wouldn\'t have changed moser baer would be also be very big today. Perhaps the only indian manufacturer of hitech products on global scale. Alas, technology industry with its killer pace of change is a very difficult beast to ride. 2. Now they did what I would call as being very smart. So the solar panel manufacturing business crashed because of excess capacity and crashing prices. So who would benefit from this ? Buyers of solar panels. So then why not become a buyer instead of a seller. This is the kind of pivoting what i would call as genius. Just that they decided to do this in an entity outside of Moser Baer. This too was a smart decision though sadly not so for shareholders of Moser baer. Fact is moser baer was a sinking ship and had no capacity to support huge investments in new businesses. Even if promoters had tried their hand at solar business under Moser baer it would probably have failed. 3. Finally the so called ownership and management separation between the old and new businesses was just a way to safeguard the new venture from any adverse affects of the old one. There was no way either equity investors or lenders would have funded the new business if there was any risk emanating from the old business. So yeah, while very smart moves, to move from a sinking industry to another sunrise one, very bad outcomes for shareholders of MoserBaer. Sad. Last - words of advice i heard from a gentlemen who had seen vagaries of taking on too much debt, and then taking decades to pay off the loan and principal on those. He says in his experience its best to declare bankruptcy and start over again rather than keep dragging under the weight of the old. Once free from the weight it makes one free to once again work hard and build something and then try to pay off old creditors rather than try to do it in the old venture itself. Good luck Mr Puri, hope you use some money made from your new venture to pay off creditors from your old venture and do some good for your shareholders.on Sep 22, 2014
Positioning the company\'s solar business in the good light by quoting EBITDA figure of Rs 500 cr in FY14 on a revenue of Rs 900 cr is wrong. This gives the sense that the company is posting an extremely healthy operational margin. The fact is that most solar plants have minimal to no operational costs in their early years of operation and hence EBITDA margins are high for renewables. The devil is in the way these projects are financed and thus interest costs and O&M maintenance costs need to be closely looked at. Look at PAT margins to see how the company is performing and the true strength will come out. In HPPPL\'s case most of their projects have their in house solar pannels and O&M agreements are also with sister companies. From an investors point of view this means an overall greater exposure to the Moser Baer group. One more important thing to look at is how quickly are these plants getting their payments from government discoms. Barring Gujarat, most other discoms with which their projects deal with do not pay well and have outstanding payments for months, in case of Tamil Nadu it could be going into several months. All this hits the net worth of the company directly. Hope this helps gauge the sector from a slightly different angle. Many thanks Rohiton Sep 19, 2014
I do agree that PAT figures do tell the real story but having said that, the point about having an extremely large exposure to the group is slightly incorrect because one of the reasons indian markets got inundated with solar panels, making MB noncompetitive was the fact that MB could never match up with the price. Receivables cycle is not extremely positive for many of the states but one does also need to look at the geographical dispersion of their projects. And most of their projects are in Gujarat wherein receivables cycle is typically two months.on Sep 22, 2014
By separating yourself from your fathers business - window dressing - :) you can't wash your hands...when you were wrong for the first time.. you can also be wrong second time as well.. people who invested in moserbaer on your confidence and vision are disappointed and left beggared... only one PE is backing you, this is blackstone..so your hpppl is closely held company - where as there were lots of many reputed PE in Moser baer india.. ie.Warburg Pincus / ELM International Ltd / Randall Investments Ltd - to just refresh your memory plz read the same article of forbes - First regain your lost glory in moser baer and than come out to ask money from public - people aren't anxious about your IPO ...create that anxiousness and desperation by taking back the moser baer to its lost path.. http://forbesindia.com/article/boardroom/moser-baer-has-all-but-shut-down/33432/1 Take your time 2-3 years more and than come out for ipo till then prove your credibility..on Sep 16, 2014
How much did you lose Rajesh?on Sep 16, 2014
i have lost 95% of my investment in moser baer.. and so does every investor who invested in it .... moser baer shares slided from 300 to 3 ... hope hpppl not meet the same fate.. \" best of luck ratulji..on Sep 16, 2014
Found one more article on net about moser baer ... http://www.moneylife.in/article/warburg-pincus-dud-investment-in-moser-baer-an-honest-mistake/25716.htmlon Sep 17, 2014
What environmental precautionary measures shall be taken in such solar based power generation project in term of burning birds???on Sep 16, 2014