SmallCap Spotlight throws the spotlight on Oriano Clean Energy, a company that has seen tremendous growth in a competitive market, driven by trust, innovation, and dynamic adaptability. By leveraging AI, IoT, and blockchain, the company is enhancing project execution, while expanding partnerships and venturing into new domains like hydrogen technology. Oriano’s focus on strategic growth, reinvestment in technology, and delivering quality has doubled its financial network post-COVID. Hear what Co-founder & CEO, Lokendra Singh has to say…
Rumela Banerjee: Hi, this is Rumela Banerjee and joining me today is Lokendra Singh, Co-Founder and CEO of Oriano Clean Energy. Many thanks for joining.
To begin with, Oriano has grown rapidly in a competitive market. What are the key factors that have contributed to this growth and how do you plan to sustain this momentum as you reach closer to your ideal?
Lokendra Singh: See, solar or renewable energy is a very innovative-oriented industry and it is very dynamic of its kind. Therefore, for understanding the whole sector and understanding what government policies are going to come, the strategies need to be very dynamically tweaked. And therefore, we need to predict the market, how it is going to come in the next couple of years.
And therefore, we need to make the, I would say, planning accordingly. So, I will just give a brief summary of how we did. Up to 2019 or 20, there was not much potential into commercial and industrial renewable power space.
And we ventured there and we started suggesting customers to go for an OPEX kind of customer, where we started giving, apart from the EPC that we do as a core, we started offering all the power purchase agreements to the large funds along with the land, all the requisite approvals. So, that has opened a new market at all for a lot many investors, which was slightly not being developed there. That point of time, the market was hardly somewhere around 100 or 200 megawatt a year.
Today, this market has grown to some 4 gigawatt a year. So, that is something that we need to slightly stay ahead of the curve. So, that is one of the focuses that we need to put at that point of time.
And agility is the key over there, that whenever the new market, when we enter into particular states, India has a lot many states, we currently operate into 14 of the states. So, where the new policy is going to come and how the policies are going to shape up. And accordingly, we have to reach to our customers or exit from that market in a strategic manner, so that we should ensure that whatever the effort that we are putting up, that should get materialized.
So, that was one of the key factors for our sustenance.
Rumela Banerjee: So, in this crowded solar EPC space, what unique value propositions does Oriano offer that have proven most effective in winning and retaining your major clients?
Lokendra Singh: The major factor, I would say, is the trust that we have developed over all these couple of years. We have been into this industry for more than a decade now. And Oriano itself, prior to Oriano also we were operating, but into Oriano itself has completed its nine years journey. And all these years, we have worked with almost all kinds of funds into India now.
And we were there in the CNI space as well as the large utility EPC space. The major factor that we have earned so far is the trust of our customer. Contracts have always been paper-tight.
But in spite of that, how we need to ensure that we are building trust with the customer by delivering whatever we are committing, the right quality, the right HSE practices, and the right whatever we are proposing to a customer, that exactly is happening onto the ground with the right timeline frame. So, once we started developing that and our core values of ethics and integrity, that has gone down to the whole value chain into our system and into all our employees. So, therefore, whatever is being said and what is being committed at our level or at our N-1 level to our customers, that’s been ensured by the organization that that same thing gets delivered.
It’s a project, not many challenges also used to come. But I think this is one of the trust that we have gained so far by delivering multiple projects. And currently, we have done almost 40 plus projects in India, all kinds of sizes.
And I think that was one of the very key factors.
Rumela Banerjee: If you could tell us how Oriano is leveraging new age technologies like AI, IoT, or blockchain to enhance its project execution and maintain our competitive edge.
Lokendra Singh: See, earlier, we were not that big an organization.
So, we slowly started putting a strategy that we are going to grow into the next five years. So, that strategy was devised two years back. And every year and every half year, we keep on relooking at our strategy.
And that is what I meant that agility means dynamic, ensuring that we remain dynamic into a segment. So, accordingly, when we see that our size is growing, therefore, we have moved on to a SAP system, in order to ensure there should not be any challenges with the vendors as well as our customers in timely reporting, as well as ensuring that the quality and the safety protocols that’s been there, that’s got derived by our software protocol. Now, we are also moving forward with the digitization space where we are now transforming our engineering through a tool, where the whole of the engineering shall happen through a tool itself.
We are currently using a lot many third party AI tools, like PV case is there, rated power is there. There are other system tools, which helps with engineering, and that speed of the engineering itself. But apart from that, what we see is that whatever the experience that we are earning, and every member we are earning from every site that we construct, or every project that we do, there are a lot many inputs that we used to get.
So, how to centralize all those inputs and then ensure that through AI, we take our cognitive decisions delivered through software, so that whatever the targets and whatever the project expectations we are having, there should be perfect alignment with them. And accordingly, likewise, in order to enhance our value to the customers, we are also developing in-house SCADA and an analytics engine to give more value to our customer on a further optimization and the upkeep of the plan.
Rumela Banerjee: Now looking back at Oriano’s journey, what were the most unexpected challenges you faced? And how did overcoming them shape the company’s current direction?
Lokendra Singh: So, I think we are growing good.
We were having investment from the UK DFID, which currently is a UK FDCO, which is a Commonwealth program of the UK. And through SIDBI, they invested through SIDBI, they have created a fund as Samridhi Fund, and they invested into our organization, which they were holding some 20% stake. However, 2020 was one of the, I would say one of the worst years for us, in terms of the financials, where our majority of the network got eroded, because due to the COVID, there didn’t happen to be any project.
But what we did during that period of time, a lot of companies, they downsize their employees, they reduce their salaries, we didn’t do any of this, of that sort. What we have asked people to stay strong, it’s going to be a tough time. But we have to come out very strong.
The projects are delayed. Currently, we don’t have a project as of now. But the salaries will keep on coming.
There are no cuts in that. But when the projects are going to come up, we need to ensure that every one of us works very hard to create a good bottom line so that whatever we have lost, we try to recover in the next couple of years. I think that the trust with the people, the strategy that we put ourselves to be a bottom line driven company, not going with the top line approach.
I think that was one of the core values and the core team which got created and which got retained during that period of time. Over a period of time that team got developed and the new members kept on coming. The sense of belongingness with the organization, the approach of being bottom line driven, the approach of quality and compliant driven company.
I think these are the certain factors which have helped us to grow multifold in the last couple of years. I would say the network has almost, I would say, what was before COVID it was, now it is more than doubled. So in spite of the losses, we have recovered all those losses, we made certain profits also.
So right now, the turnovers have multiplied by, I would say, before COVID it was whatever it is, now it is more than two and a half times of that. So this is how we are growing and every year we are multiplying our turnover.
Rumela Banerjee: How has Oriano’s approach to building strategic partnerships evolved and how do you see these relationships changing as you transition to a public company?
Lokendra Singh: Yeah, so see there are multiple factors.
First of all, there are two or three factors when we talk about our existing businesses. There are multiple stakeholders, like the supply chain partners, then there are contracting partners. And thereafter, when we diversify into new other segments, then there are new collaborations that we are looking for.
So I will try to address a couple of. So like for our existing EPC business of the solar power plant itself, when we say that, we have streamlined OEM partners who work delicately with us. And there is a lot of trust which got built in the last couple of years.
So we don’t introduce new partners randomly. We take a lot of time, but when the new partners come on board and when the trust gets developed, we keep on developing them. I think that gives an edge on securing our supply chain with all our existing OEMs.
So we get timely, we ensure that their interest is timely payments, timely delivery or getting the material done and be very ethical. So they feel secure with us. Whenever any kind of issue comes up, they know their interests are going to be secured by the organization.
So that is something that that trust that we have built so far. And likewise, when we see a contracting partners like our multiple civil contracts, electrical contracts, labor contractors, EHV contractors, I would say now the requirement along with the global funds that is coming up and it’s increasing with the ESG, with the HSE also, developing them, re-skilling them, giving the proper training, adhering them to those protocols and then increasing their size and finding the right partners. I think that process is currently on.
We are re-skilling and re-developing them to a larger scale. And we are finally further adding up the new partners over there also. Likewise, when we go to the new domains, we are further expanding into new diversifications where we are soon going to be offered as a SCADA, as an analytics engine to the market, which we are developing in-house.
We are going to have certain collaborations into robotic model training systems as well as tracking technology. So these are the certain diversifications we are doing when we talk particularly about solar space. Further, what we are doing, we have also started offering apart from EPC as our development as well as asset management platform.
So we give land, we do our own due diligence, vetted by the tier one legal entities. Thereafter, we acquire all the land, we do all the land acquisition, do all the requisite approval for a particular state of putting up the solar plants, all kinds of approval that is required. And that we give as a turnkey service.
So we are now becoming a one-stop solution to our customers where we provide the shovel-ready infrastructure for putting up the power plants. Thereafter, we construct the whole power plant. And thereafter, we have a separate division for asset management.
So currently, almost like one gigawatt of projects are under asset management along with us. So that’s what we are doing. So we are giving the whole end-to-end services to our customers that way.
Rumela Banerjee: Beyond capital raising, what are the key strategic advantages you anticipate from going public?
Lokendra Singh: So I tell you during COVID also, we had a very tough time in finding or hiring the banking partners. There are a few banking partners who really supported us during that tough time.
So as we are growing, and as our targets are, we are going to do almost like 800-2000 crores. So currently, we close this year to somewhere around 350 crores. Next year, we are aiming for 800 crores of revenue.
And therefore, there’s certainly going to be a working capital requirement. Now, in all these years, only the COVID year was the year where we went into negative. Otherwise, we were always a positive company.
We always made profit in all these years. So the core, which requires other strength, which requires to remain positive, that is our one of our strengths, that we were always been a profitable company, we are bottom line driven company, top line is different, but again, we are always a bottom line driven company. That is one of our core.
And how we maintain that core is by adding certain values, certain different offerings, where we can reap more benefits, more profits, than from the EPC like land and asset management, I would say. They were always very gray areas for any other items. Now we are starting an IPP platform also where we are going to put up these capitals, so that we ensure that whatever profits that we are accruing now, and whatever the capital that we are raising, we were able to at least that will more like a annuity returns, where they will have a return to somewhere around 15 to 20% or 25% in return.
So that is how it will help us to grow that capital. And then also further enhancing our values, value offerings, by further collaboration of manufacturing of robotic technologies as well as manufacturing. And then going forward, we have a plan to go into fuels and technologies.
Rumela Banerjee: So if you could tell us the key financial metrics you believe investors should focus on?
Lokendra Singh: If you see our last three years trajectory, the major financial parameter was like our EBITDA was always somewhere around seven and a half to 8%. And that is point number one. So whenever the turnovers go, it is increasing, our EBITDA is always we are maintaining our EBITDA.
And that is one of the very critical things. That means that we have created our in-house systems, in-house process, in-house financial ecosystem, where we are ensuring that timely delivery, as well as maintaining the financial interest of the organization is one of the key factors. Apart from ensuring the customer delight that we do with our offerings, we buy our execution.
But these are something that is there. In the last nine years, not even once, even during the COVID times, we have defaulted on any kind of statutory payments, be it bankers, be it statutory bodies, be it any government bodies, be it anybody. So that is something that is there.
Third thing is that we have appointed a large number of partners who consult us on the strategies as well as taxation, income tax, GST, whatever it may be, or any further investments also. So that we remain, we try to avoid and we try to be immune to any kind of surprises, which can happen because of the misinterpretations. So these are the few key factors that we have developed so far over here, which ensures that the financial ecosystem of the organization remains secure.
Rumela Banerjee: Can you also share some specific financial targets Oriano aims to achieve in the first two to three years post-IPO?
Lokendra Singh: See, last year, as I said, we did some 350 crores, slightly more than 350 crores approximately. Although the books are currently into, finally into the closing stages. So it may happen that we have slightly higher, slightly lower.
But next year, we have a target of somewhere around 800 crores. We already have an order book right now that is 350 crores. And I’m hopeful that in the next couple of weeks, we’ll have another 500 to 600 crores of order book.
So this next year, we are going to touch somewhere around 800 to 1,000 crores of revenue. Going forward, we have a target of 1,500 crores for the next financial year apart from for 2026 and 2,500 crores for 2027 and 4,000 crores for 2028. These are all well documented and well strategized numbers.
We are in order to support that also, we have a plan for the diversification into new domains. Apart from solar as an industry, we are going to enter into national high speed railway constructions, as well as airport constructions. So that these are the new two segments, we are going to enter and are going to offer our services as a development and construction for EV segment.
Rumela Banerjee: Post IPO, what’s your strategy for balancing reinvestment in growth versus returning value to your shareholders?
Lokendra Singh: That’s a very important question. So see, this organization is getting transformed to a tech oriented company, as I said. And right now, we are in the process of opening an office in Germany also, so that we can have technological collaborations going forward.
And while we are into India also, we can offer there because we are a manpower driven company. And this whole business is a skilled manpower driven business. So we have our in-house SOPs programs that we are conducting for training, re-skilling of the people, re-skilling of the vendors.
And so that we deliver quality and projects as per the global requirements. So that is where we are opening an office into Germany from where we are going to enter into the US as well as the Middle East market. We are further strengthening our position into other services like robotic technology, as well as tracking technology, apart from construction.
However, now further, we are also since I have already told you, we are already a development and EPC management company. We never been into the business of holding assets on our own. Now this year going forward, we will start adding, starting an IPP platform as well, where we are going to put up an asset onto our groups through our investment that we are going to raise and further the investment going forward that we are going to raise further and along with the organization approvals also.
So that will ensure that whatever the investment is there, it’s going to be onto the slightly annuity kind, where we will be able to secure at least 15 to 20% of annual returns to our investors. So that is something that at least I am targeting and we believe and there are not many platforms where this goes in sync with them, that all the IPP projects when it comes to the annualized returns, it comes somewhere around 15 to 20% overall under the whole portfolio. So that is something that we are getting secure.
However, going forward, apart from that, we are going to venture into fuel cell technology when this hydrogen economy is going to flourish in India. So we are going to start now. We want to venture into creating hydrogen, providing the hydrogen stacks and this PEM stacks as well as fuel cell stacks to the automobile companies, so that we can be a valued partner to the automotive industries.
Rumela Banerjee: If you can tell us how you plan to allocate capital among areas like R&D, geographical expansion and potential acquisitions.
Lokendra Singh: So here the capital that is going to be raised is going to be for the IPP and for the development of the solar paths. So there is going to be whatever we are already doing from our EPC business that definitely will go to expansion of the new geographies because there are a lot of risks that go in.
So there we are going to put up EPC capital and the development of the new tools that will go there. Whatever capital that we are going to raise, that will be invested further into IPP as a platform, solar park, where we make a good size of returns there and into the fuel cell technology. So I would say somewhere around 80% will go into the IPP platform and somewhere around 20% or 15% approximately will go to solar park development and 5% will go to new technologies.
Rumela Banerjee: How is Oriano adapting its strategies to address global supply chain disruptions and geopolitical tensions affecting the renewable energy sector?
Lokendra Singh: See this geopolitical tension, yes, it’s one of the major currently very risky factors for many countries and a lot of developments not only to our country, to other major countries as well. I think going more forward and predicting the risk is one of the keys where we try to secure our order books and we try to book much of the raw material in advance with the right parties who have a good financial strength and leadership into the industries. We try to ensure that we book much well in advance so that we get the deliveries on time.
I think that is the only factor and that is how the only prediction we can do as of now. So somewhere we can make, we have to slightly buy at more cost also, that can also happen but I think better would be to be on to the secure side by timely procuring the things, by timely releasing the orders to the partners and then having a good relationship with all these OEMs that only can fortify the results.
Rumela Banerjee: What unique cross-border collaborations is Oriano exploring to drive innovation in clean energy?
Lokendra Singh: We are already in the process of acquiring one robotic cleaning system company.
We are developing our in-house SCADA system as well as in-house analytic engine also for creating our processes. However, we are going to start, we are already in the process of an advanced stage of discussion of collaborating with the technology supplier for the solar trackers. So that we are going to offer now into the Indian market and going forward, we have a strategy to venture more into fuel cell technology where we can offer a fuel cell based engine to the hydrogen car production to the automotive customers into India and that will take time, it will take some couple of years but we are going to start those efforts from now also, now only so that in next three to four years, we will be able to slightly be ahead when it comes to monetize the investments.
Rumela Banerjee: Lokendra, you have led Oriano from its inception to the brink of an IPO. Can you share a personal anecdote that illustrates your approach to fostering innovation within Oriano?
Lokendra Singh: When we see our journey and when we see the risk we have gone through, it’s very important to have a thought process of repurpose of every single activity that we do. So we have a concept of repurpose of the thing, re-engineering and value engineering.
So how to enhance our efficiency, keep on checking it, whether those things, those factors which are relevant a couple of years back, whether today we need it or not and how the system is enhancing and moving forward, what are the new things that we need to do in order to secure our time investment with any kind of activities that we do. So I think the crux of it would lie that we have to be profit-driven company and value engineering is something and repurpose of something is at our core and therefore what we do is we have started our training programs internally as well as to the external stakeholders including our vendors so that whatever we believe that has to be done something into a certain manner that has to happen in that manner only.
Rumela Banerjee: Alright, time to wrap up this discussion. Many thanks for joining.