MITCON: Interview Re Future Prospects

MITCON multibagger
  1. Why is the revenue in H1 2023 (35.45 crores) lower than that of H1 2022 (60.29 crores)?

Reply: The Company revenue comprises of revenue stream from solar power EPC projects which is lower in H12023 as the EPC revenue is linked to Solar EPC order book and execution thereof.

2. In Q2 2023, the company reported consolidated turnover of 17.69 crores, which was derived as follows:

81% from Consultancy

14% from Renewable Energy 5% from Project Service

The questions are:

  • Given the company’s focus on renewable energy, by when do you think this business will start contributing substantially to the turnover?

Reply: The Company focus continues to be consulting in sustainability space including renewable energy. The Company offers renewable energy project execution and sale of renewable energy from projects developed by the Company to its consultancy clients. The Company will continue to explore profitable opportunities in renewable space.

  • Can we see it contributing 50-70% to the revenues by FY 2024?

Reply: As mentioned, Company will continue to explore profitable opportunities in renewable space.

  • What are the major revenue generators of the Consultancy business? (ARC, renewable energy consultancy, ethanol, hydrogen, etc.)

Reply: our consulting business offers services to various segments of industry, at this point in time, decarbonisation and infrastructure segment are amongst large contributors to consulting business.

  • What is the contribution of Shrikhande Consultants to the company’s revenues and profits? Are its revenues included in the Consultancy business?

Reply: FY22 Revenue of Rs.18.66 cr and PAT of Rs. 87 lacs.

3. As of September 2022, the company has 14 subsidiaries and associates:

  • What is the current status of each subsidiary? Are they like 10% complete, 50% complete, or 100% up and running?
  • Are they generating profits currently?
  • If incomplete, by when will they be commissioned and in what year will they start contributing to sales and the bottomline?
  • Have the subsidiaries signed on any notable clients?

    The figures below are filled in by the MITCON folks
Subsidiary/Associate% of completionProfitsBy when functional (year)
Krishna Windfarm Developers100%-189.63Fully functional
Shrikhande Consultants100%75.90Fully functional
MITCON Credentia Trusteeship Services100%44.73Fully functional
MITCON Envirotech100%10.26Fully functional
MITCON Sun Power100%72.20Fully functional
MITCON Nature Based SolutionsYet to start its operation 
7 MITCON Biofuel & Green ChemistryYet to start its operation 
MITCON Advisory Services100%9.43Fully functional
MITCON Solar Alliance100%89.74Fully functional
MITCON Impact Asset Management100%-0.71Partial functional
MSPL Unit 1100%-45.15Fully functional
MSPL Unit 2Yet to start its operation 
MSPL Unit 3Yet to start its operation 
MITCON Rooftop SolarYet to start its operation 

4. What are the orders on hand per vertical (on consolidated basis)?

  • Consultancy Business

Project Service

  • Renewable Energy Generation
    • Agro business

The Company continues to have order book spread over segments with dominance of decarbonisation, biofuels and infrastructure.

5. Your total assets are about Rs 225 crores as of September 2022 but the trending turnover for the whole of 2023 is just Rs 75 crores. Typically, investors are used to at least a 1:1 correlation between fixed assets and revenues. By when do you think we can achieve this basic goal?

As explained earlier, our assets largely constitute solar assets. For solar assets, revenue to assets ratios are much lower. For illustration, 1 MW of solar plant incurs capex of Rs 4 – 5 crore whereas annual power sale revenue would be Rs 50 – 60 lac per annum.

6. Your debtors as of 30-9-22 are Rs 37.4 crores whereas your revenues in H1 2023 are Rs 35 crores. Are you extending 6 months credit to debtors? If yes, why? Or, is there a different reason?

Reply : We do no extend credit more than 6 months, since the EPC project is completed and billed in Sept 22, hence the debtors are at higher side.

7. Your short and long term debt as of September 2022 is about 90 crores. You have provided 4.3 crores as interest in H1 2023. That implies your interest rate averages about 9.5%. Is this a special rate of interest?

Reply: The loans availed are specifically for setting up solar power projects, the interest rates are in the range of 9.0 to 9.5% presently. No special rates.

8. Are you considering repaying your debt? If so, by when?

Reply:  Debts will be repaid over the period    as    per    repayment    schedule.

9. In H1 2023, you generated operating cash worth Rs 25.86 crores, of which Rs 18.24 crores was invested? In which asset was the money invested and what is its current status? Has it started generating money yet?

Reply: Funds are invested in MITCON managed Alternate Investment Fund (AIF) specially formed for renewable projects. These funds are further invested in solar power projects executed by the Company   

10. Why is there no contribution or mention of your skill development business in the accounts? It is displayed prominently on the website.

Reply: The skill development revenue has been clubbed “Consulting and Training “ revenue head.

11. What are the revenue streams from the renewable energy business (power generation, EPC, carbon credit trading/sale, etc.)?

Reply: The revenue from renewable energy is from- Energy audit, carbon consulting, consulting in renewable power generation.

12. Does the company plan to start carbon trading in a big way, like EKI Energy?

Reply: Our services in carbon credit will continue to focus on registration of projects, trade facilitation, carbon project development.

13. In your AR of 2022, you had mentioned that the company had received orders for salt and bromine extraction. How big is this business and what is the potential?

Reply: Order pertains to engineering and Project management services.

14. What does MITCON Envirotech do?

Reply: MITCON Envirotech Ltd is 100% subsidiary company  which caters to consulting in Environment sector. Provide service to projects for obtaining Environment clearance, its monitoring and     preparation Environment Impact Assessment study.

15. In the 2022 AR, you had highlighted the following achievements. How much new business has been realized in the period between the AR publishing date and today?

MITCON team has carried out a Techno-Economic Pre-Feasibility Analysis for setting up World’s largest fully Integrated Sustainable Green Ship Recycling Park as per The Hong Kong Convention (HKC) and The EU Ship Recycling Regulations (EUSRR), thereby impacting ~8,00,000 individual’s life.

MITCON has carried out a Need Assessment Study in setting up a Spices & Food Park, for the development of Agro based Food Industry and to promote export of Agro Produce like Grapes, Raisins, Pomegranate, Jaggery Powder, Banana, Dehydrated Food Products, Turmeric powder, Spices and other value added products like curcumin.

MITCON has carried out Techno-Economic Prefeasibility Study for setting up a vehicle scrapping facility in Maharashtra State.

A Detailed Project Report has been developed by MITCON for a European Customer in setting up a bamboo based OSB Panel Board manufacturing unit. This project is one of its kind across the World as it has completely replaced hard wood with Bamboo (~1,500 TPD).

New empanelment of Financial Advisory Division with Indian banks’ association, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India, Central Bank of India, Canara Bank and National Bank for Financing Infrastructure and Development.

Reply: All the above assignments form part of Company’s consulting business and included in consulting revenue.

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