>ENTEGRA LIMITED (ANAND RATHI)

Background: Entegra is primarily in to the renewable energy sector, with its 400 MW Maheshwar Hydro Power project and also into solar and integrated renewable energy (RE) solutions. This could be a interesting play for investment in renewable sector. It is one of the best placed companies to capture the emerging opportunities in green
energy on the strength of huge cash flows from soon to start Hydro power project. Entegra has created two primary business verticals:

(i) Enner Green Resources - which focuses on development & generation of renewable energy

Project details:
■ Rs 27.6bn 400MW Maheshwar Hydro Power Project to be fully commissioned by Dec 2010 under the SPV Shree Maheshwar Hydel Power Corporation Ltd. (SMHPCL). SMHPCL has entered into a 35-year Power Purchase Agreement (PPA) with the Madhya Pradesh Electricity Board (MPEB), after which it is free to sell power on merchant basis. The PPA provides for reimbursement of fixed and variable costs and a guaranteed base return on equity (ROE) of 15.5% for generation up to design energy level (970mn units). The project is expected to generate approximately 50% higher energy levels
considering the water flow from the upstream projects – 1,000MW Indira Sagar and 520MW Omkareshwar. Considering 99% utilization and generation of 1,370mn units p.a., the project can earn approximately 16.3% additional ROE taking the total effective ROE to 31.8%.

■ Other BOO projects including 10MW Concentrated Solar Power (CSP) grid connected
project and 1MW Concentrated Solar Photo Voltaic (CSPV) grid connected project – both in Rajasthan

■ MOU with the Gujarat Energy Development Agency for 50MW CSP project in Kutch region under 25 years PPA with State Government.

(ii) Enner Green Solutions - Which provides customized renewable energy solutions and undertakes EPC projects.

Project details:
■ Design, supply and installation of 5 Wind/Solar Hybrid Systems of 12KW each in the premises of Rajiv Gandhi Proudyogiki Vishwa-Vidyalaya (RGPV), Bhopal.

■ Supply and installation of Solar Water Heating Systems of 36,000 litres per day for a residential complex in Kalyan, Mumbai

■ Development of an integrated renewable energy facility for Palais Royale- a landmark 60 floors residential tower being built at Worli, Mumbai

■ Supply, installation & commissioning of 10KW Wind-Solar Hybrid System for Vehicles R & D Establishment, Ahmednagar (a GoI, Ministry of Defence organisation) on turnkey basis.

Attractive Valuations: The latest bench-marks for Hydro-power projects valuations indicate appx. Rs 6-7 Crs per MW. This project is valued around Rs 3.5 Crs per MW closer to completion stage [June’10], thus offers good upside to investors in medium term. Accumulate.

To read the full report: ENTEGRA LIMITED