The proposed transaction would rank among the largest deals in India’s fast-growing smart metering sector and highlights the financial stress at EESL, even as IntelliSmart plays a key role in the country’s $30-billion programme to replace 250 million conventional electricity meters with smart ones.
Cash-strapped Energy Efficiency Services Ltd (EESL) and India’s sovereign wealth fund National Investment and Infrastructure Fund (NIIF) have roped in Deloitte to sell their IntelliSmart joint venture this fiscal year. This comes at a time when the state-run energy efficiency firm plans to cut its mounting debt pile of about ₹6,049 crore, chief executive officer Akhilesh Kumar Dixit said in an interview on Monday.
The enterprise and equity values of the deal are estimated at $723 million and $500 million, respectively, said another person in the know of the developments.
The proposed transaction would rank among the largest deals in India’s fast-growing smart metering sector and highlights the financial stress at EESL, even as IntelliSmart plays a key role in the country’s $30-billion programme to replace 250 million conventional electricity meters with smart ones.
Set up in 2019, IntelliSmart was awarded 22 million smart meter orders in the backdrop of India running the world’s largest electricity smart metering programme. This will not just help reduce power theft but also ensure reliable electricity supply.
IntelliSmart has installed 5 million smart meters and has presence across Uttar Pradesh, Assam, Gujarat, Bihar. Gujarat, Rajasthan, Haryana and Delhi.
“We have 49% equity in IntelliSmart, which is a very big company in smart metering. NIIF has 51% stake. So now we are selling our 49% stake. We are selling it jointly,” Dixit said.
“NIIF is also selling its stake in IntelliSmart, which will be the largest transaction in the country’s smart metering space,” said a second person aware of the proposed transaction requesting anonymity.
Energy efficiency company EESL is owned by public sector Maharatnas NTPC Ltd, Power Grid Corp. Ltd (PGCIL), Power Finance Corp. (PFC) and REC Ltd. At the end of fiscal year 2024 (FY24), NTPC and Power Grid held 39.25% stake each in EESL, followed by Power Finance Corp that held 11.38%, while REC held 10.11%. In FY24, NTPC and Power Grid had hiked their stakes from 37.7% each with a cumulative investment of ₹760 crore.
Queries on the development emailed to the spokespersons of NIIF, Deloitte, NTPC, Power Grid Corp, Power Finance Corp, REC and the power ministry on Monday evening weren’t immediately answered.
The net worth of the joint venture company under the power ministry was ₹1,496.63 crore as of 31 March, 2024. EESL has a workforce of 761 people, including 475 third-party employees.
“The target is to sell IntelliSmart around February-March. So next year, loan repayment will be very easily done through these proceeds,” the CEO said. “Then we will be on very comfortable paths, and then we will be in normal business. As of now, we are doing whatever we have without much of capex.”
According to its annual report, EESL’s total income in FY24 fell 11% to ₹1,176.79 crore from ₹1,315.72 crore in FY23. Its net loss narrowed to ₹459.02 crore from ₹574.26 crore in the previous fiscal. The company attributed the fall in revenue to the lag in collection of dues from the states.
“I think Deloitte has reached out to the potential investors with the details of what IntelliSmart is and what order book it has. Other than that, they are going to enter the water meter and gas meter space,” Dixit said, who took over as CEO in June this year.
EESL also plans to exit three other joint ventures: NEESL, a JV with Neev International APS; Energy Efficiency Services Co Ltd Thailand; Energy Efficiency Services LLC (UAE), the CEO said.
Among its other joint ventures and subsidiaries, Dixit said only Convergence Energy Services Ltd (CESL) and Edina Power Services in the UK would continue operations.
“We are closing all of them; there is no transaction happening. We are closing. Operationally, there is no movement; we need to complete the paperwork for closure…” he said. “There will be no financial impact of exiting the other JVs, as there is no investment, not salary, no manpower, no office.”
“One is CESL, it is profitable and there is Intellismart, which we plan to sell. Other than that, we have not put capex in any other JV. There is one JV in the UK, Edina. And they are also now doing good. They are specialists in BESS and trigeneration, so we will use their credentials when we are bidding for BESS or trigeneration here in India,” Dixit said.
EESL had acquired Edina, a supplier, installer and maintenance provider for combined heat and power, gas, and diesel power generation solutions in the UK for ₹493 crore in 2018 through EnergyPro Assets Ltd (EPAL), a joint venture with a UK-based advisory company that consults on energy efficiency projects.
On the other hand, another subsidiary of EESL, Convergence Energy Services Ltd (CESL)—running India’s largest electric bus tender for 10,900 buses—plans to bid for another 6,000 buses in the next financial year.
Mint had earlier reported about IntelliSmart stake sale plans. It also recently reported, citing people in the know, that the promoters of EESL are considering listing the company’s shares on the stock exchanges as part of its plan to exit the company.
“There has been no communication from the promoters on an IPO,” Dixit said when asked about the listing plans.
While the targeted debt levels for this fiscal is around ₹5,500 crore, the dues owed to EESL by states and government departments stand at ₹3,900 crore, said Dixit, and added that this number is expected to reach about ₹3,400 crore by the end of this fiscal.
“Out of ₹3,900 crore, the dues of street lights is around ₹3,000 crore; and ₹900 crore is for other rural schemes, building audit and BEEP (Building Energy Efficiency Programme),” he said.
Smart meters are digital devices that provide accurate and live consumption data, allowing utilities and consumers to monitor and manage energy usage more effectively. They can improve operational efficiencies, reduce technical and commercial losses, and boost the finances of power distribution companies. Of the planned 250 million meters to be installed in the country, 224 million have been sanctioned while 49 million have been installed.
Attracted by India’s smart meter market potential; the Adani Group, Tata Power and GMR Group have forayed into the space. Several global private equity funds and sovereign wealth funds have also invested in this space in India, including General Atlantic-owned Actis LLP that has invested $200 million in a joint venture with EDF India, and Singapore’s GIC that has invested ₹519 crore in Jaipur-based Genus Power Infrastructures which plans to put in $2 billion. Also, New York-based I Squared Capital invested $100 million for a controlling stake in Polaris Smart Metering.
