Major state-owned power companies are exploring an exit from their financially stressed energy efficiency joint venture, Energy Efficiency Services Ltd (EESL), through a potential public listing. This move comes as the company struggles with mounting dues exceeding ₹4,000 crore and significant debt.
The Exit Strategy and Mounting Financial Stress
Promoters of EESL – NTPC Ltd, Power Finance Corp. (PFC), Rural Electrification Corp. (REC), and Power Grid Corp. of India – are in preliminary discussions to list the company's shares on stock exchanges. According to sources, an offer for sale by the promoters is being considered as a preferable route compared to a strategic sale.
This deliberation occurs against a backdrop of severe financial strain. EESL is owed massive outstanding dues, primarily from state government departments, urban local bodies, and power distribution companies under schemes like the National Street Lighting Programme. These dues stood at ₹4,315 crore at the end of the financial year 2023-24 (FY24), severely crippling its cash flow.
The company's annual report for FY24 explicitly states that these large outstanding receivables have hampered growth and forced EESL to rely on short-term working capital loans to finance operations, adversely affecting profitability.
Investor Appeal Amidst Challenges
Despite the weak financials, some experts believe EESL's profile might still draw investor interest. Financial expert and former IBBI chairperson, MS Sahoo, noted that the company possesses a revenue stream and the strong reputation of its promoter PSUs could help. He also suggested that a change in shareholding, bringing in private players, could alter the company's approach to recovering its dues.
Credit rating agency CareEdge Ratings, which assigned a stable outlook to EESL's long-term facilities, cited strengths like its complete ownership by strong GoI-owned PSUs and its strategically important role as the nodal agency for government energy-saving programmes. The agency also highlighted the cost-plus model that ensures steady returns.
However, CareEdge also flagged critical constraints: susceptibility to counterparty credit risk due to weak client finances, highly leveraged capital structure from debt-funded investments, and weak operating performance. EESL's total income fell by 11% to ₹1,176.79 crore in FY24, and it reported a net loss of ₹459.02 crore, albeit narrower than the previous year.
Broader Context of Green Energy Listings
The plan to list EESL aligns with a broader trend of renewable energy and energy transition companies tapping the public markets. This wave includes the recent ₹10,000 crore IPO of NTPC Green Energy Ltd in November 2024. Other entities like SJVN Green Energy, NLC India's green energy arm, and companies like Waaree Energies and Vikram Solar have also listed or are planning to do so.
EESL's current shareholding pattern shows NTPC and Power Grid each hold 39.25%, followed by PFC (11.38%) and REC (10.11%). The company has a net worth of ₹1,496.63 crore (as of March 2024) and operates several subsidiaries and joint ventures in India and abroad, including Convergence Energy Services Ltd (CESL) and IntelliSmart Infrastructure.
When contacted, an EESL spokesperson stated that questions should be directed to the promoters, while the promoters and the power ministry did not respond to queries.
