Sterling and Wilson Solar Q4 2021 Results-Heavy Losses

Highlights :

  • The leading EPC firm continues to be dogged by challenges, both avoidable and non-avoidable, ever since its public listing
  • Q4 saw it bein ambushed by supplier bankruptcies, purchase contract issues, and more.
  • Under new Global CEO Amit Jain, firm will hope for more stability and the issue of promoter dues to be put behind for good.

The Shapoorji Pallonjee Group’s Sterling and Wilson Solar, on Tuesday, announced their March results and the story is not good. Having already informed exchanges about hits the firm took in the quarter from a contractor’s bankruptcy, and other issues, the firm slipped into losses for the year. The firm had earlier issued a warning regarding impact from contractual issues in Q4.

Q4 results SW Solar

The total income of the company in the March quarter stood at Rs 1,416.33 crore, down from Rs 2,120.50 crore in the year-ago period.

The firm’s (standalone) net loss before tax of Rs 134.77 crore for the quarter that ended March 31, 2021. The company, SWSOLAR, on the other hand, reported (standalone) profit before tax of Rs 229.68 crore in the corresponding  quarter i.e Q4 ’20. Consolidated losses for the quarter hit Rs 344 crores.

Its expenses also dropped, from Rs 1,961.40 crore a year earlier to Rs 1,816.79 crore.

Given the present economic recession and the problems that selling shareholders or promoter group are encountering as a result of COVID-19’s severe impact on their business, a request from the promoting group was  considered and the Board of Directors had decided to extend the repayment deadlines of amount owed to the firm by promoters until September 30, 2021, and to impose an extra interest spread of 400 basis points over the average interest rate, as well as to require that assets be given to cover the outstanding inter-corporate deposits / loans

The Group continues to have a solid order book, good net worth, and a favourable net current asset position, which might be the only silver lining for its investors. The Company’s management and Board of Directors have also assessed the Group’s capacity to continue as a going concern, as well as its expected cash flows for the next 12 months and financing arrangements to meet its working capital needs and essential capital expenditure.

Trade receivables from a customer aggregating to Rs 92.45 crores which were outstanding as at 31 March 2021 have also been provided for  with an expected credit loss provision of Rs 31.33 crores, although the auditor is skeptical about it.

Thus, while the solar EPC business suffered a de growth of over 10 percent from Rs 5391 crores to Rs 4825 crores for the year, Solar O&M, touted as a key focus area for its dependable revenues, grew 37 percent from Rs 183 crores in 2019-20 to Rs 252 crores in 2020-21.

For new global CEO, Amit Jain, and the firm itself, hopes will be high that the change will lead a change in fortunes too.  The solar epc business, with its shorter contract time frames puts pressure for a contracts pipeline, but at the same tie, the opportunity for a quick turnaround is always there, as a firm can make corrections quickly.

Contributed By Shivam Vashisht

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