NuPower Renewables: What’s up with this company at the centre of Kochhar-Dhoot loan scam?

Chanda and Deepak Kochhar (Image: PTI)

“Office mein ek Sir hain, unhone kisi ko number dene se mana kiya hai. Abb 10-15 log hain, lekin zyaada koi aata nahi hai office.”

(There is one official in the office, who has forbidden sharing his number with anyone. Now, there are some 10-15 people working here, but not many come to the office.)

A call to NuPower Renewables Ltd’s (NRPL) office in Mumbai elicited the above response. The company has been at the centre of an alleged Rs 3,250-crore loan scam that led to the high-profile arrests by the Central Bureau of Investigation (CBI) of former chief executive Officer of ICICI Bank, Chanda Kochhar, and her husband Deepak Kochhar, as well as Videocon Group Promoter Venugopal Dhoot.

NPRL was one of the many renewable energy companies that sprang up, riding the global wave of clean energy, and which was buoyed by a policy push by the Indian government. It was a little-known company despite an operational wind energy capacity of around 180 megawatts (MW). It came into the limelight for the wrong reasons, when in October 2016, whistle-blower Arvind Gupta, founder, and trustee of the Indian Investors Protection Council (IIPC), wrote about the “illicit banking and commercial relationship” between Dhoot and Kochhar's family on his blog after his earlier letter on the same to the Prime Minister failed to elicit a response.

While what followed is well chronicled, very little is still known about the operations of this company. First, let’s answer the most elementary question ― Is this company still around and operational?

Well, yes. The company is operating its existing projects with a lean staff, but has not taken up any new projects since the alleged scam came to light, sources in the know said.

Cash strapped

CareEdge Ratings in a note in April 2022 said it had a ‘D’ rating on the long-term bank facilities of NRPL. The rating indicates the company is in default or expected to be in default soon. The rating agency had said that the company’s liquidity position remains poor, and it had free cash and cash equivalent of just Rs 0.1 crore as on December 31, 2021, and it continues to default on its repayment obligations.

“NRPL reported delay in servicing of debt obligations (i.e., principal installments) and interest payments on account of poor liquidity position due to delay in realisation of receivables from the counterparty (i.e. Maharashtra State Electricity Distribution Company Limited),” CareEdge said.

Since its inception in 2008, NRPL has been a promoter-driven company. Decisions regarding funding, operations, and expansion were mainly driven by promoter Deepak Kochhar, who is still a director in the company.

“Ever since the episode of financial fraud played out, there has not been much action at their end,” a source who has worked closely for the company said, requesting anonymity.

Moneycontrol found that apart from Deepak Kochhar, the company has two more directors who are currently managing the firm’s operations ― Savio Ignatius Braganza and Umanath Vaikunth Nayak. Moneycontrol has sent an email to both seeking their comments on the firm's operations, and the story will be updated when we get a response from them.

Operations hit

The CareEdge Rating report shows that NuPower's operating income declined 40 percent to Rs 32.01 crore in 2022 from Rs 53.36 crore in 2020.

“This indicates that the company’s plant availability has deteriorated substantially. It means that the company is already going belly up. Usually a solar power plant witnesses about a one percent drop in revenue for plant degradation. But the degradation of NuPower is much sharper, implying that its plants are not being operated and maintained optimally,” an expert who has analysed the financials of the company, said.

Currently, NRPL is operating with its existing assets only. It has about 43 MW of operational assets. The group also has operational capacities in its subsidiaries, namely, Echanda Urja Private Limited (100.50 MW in Tamil Nadu), and NuPower Wind Farms Limited (34.25 MW in Karnataka).

“Even if the company is raising bills every month and the money might be paid by the discoms, NPRL cannot access all the money because of the ongoing cases. The promoters’ financial wherewithal is also limited. So, hardly any payments are being made. The company is just running because the cost of operations of a solar or wind power plant is quite minimal…but it could shut down any day.”

Lean staff strength

“The company is generating power and selling it to discoms. To that extent, not many operations are happening in the firm. Only the basic billings and collections are taking place,” said a second analyst who worked on the company’s profile previously.

At least three sources said that the company currently has 10-15 employees on its payrolls, with the maximum staff in the accounts department. Most other operations are managed by third parties.

“They have retained some people in finance and accounts, some of them manage the discom payments. There are a few other project managers and engineers who are taking care of day-to-day operations,” a senior power sector official in the know, said.

But the lack of leadership amid the investigation into the scam means that no strategic decisions have been taken regarding the business.

“Now the problem is that NuPower’s promoter is not there in action and it is a case of financial fraud. In such a scenario, the company’s financing, funding, and bank accounts get frozen, especially when the CBI and ED are involved. Hence, any kind of financial operations within the company will be very difficult to undertake. The company has already defaulted,” the analyst said.

Discom woes

The company faces a lack of fresh funding and leadership, which is curbing its ability to even meet its operating expenses. According to CareEdge, it also faces a poor liquidity position due to a delay in realisation of receivables from the counter-party power discom ― Maharashtra State Electricity Distribution Company Limited.

According to power purchase agreements (PPAs), the power generator is obliged to supply a certain volume of electricity. If the generating company does not undertake proper operations and maintenance (O&M) processes, its output may fall below the minimum level of power supply that was promised in the PPA.

“There are just two options for the company ― either the counter-party, such as Maharashtra State Electricity Distribution Company Ltd, takes action and flips the assets to a new buyer, or the banks would drag them to the Insolvency and Bankruptcy Code, 2016 (IBC) and there will be a new buyer. But, insolvency and related moves will not happen until the promoters are freed on bail or from the cases. So, it will be a long-drawn process,” the first analyst quoted above said.