EESL Plans to Raise $174 Million Bonds to Expand LED Program

  • EESL looks to issue bonds worth 5 billion rupees in September
  • Co. to list $100 million Masala bonds in London in November

Energy Efficiency Services Ltd., the government agency responsible for procuring and distributing energy-efficient LED bulbs in India, plans to raise about $174 million this year by selling bonds in India and abroad, a company executive said.

As part of a $1.2 billion efficient-lighting program -- the brainchild of Prime Minister Narendra Modi -- EESL has distributed 140 million LED bulbs out of the 770 million expected to be doled out by March 2019.

So far, 26 billion rupees ($386 million) has been spent to procure 180 million bulbs and 800,000 LED street lights, according to EESL Managing Director Saurabh Kumar. Eighty percent of the program is to be funded through debt, Kumar said.

“We’re going to issue the first tranche of domestic bonds of five billion rupees with a tenor of five years in September and are also preparing to issue green Masala bonds in November for $100 million on the London Stock Exchange," Kumar said in an interview in New Delhi.

Through a competitive bidding process, EESL has engaged Mumbai-based Trust Investment Advisors Pvt. as the arranger and advisor for the domestic issue, Kumar said, adding that a ratings agency would be finalized this week for the international bonds.

Credit Lines

“Towards the middle of August we will scout for an arranger-cum-advisor for the Masala bonds," he said.

EESL will continue tapping multilateral financing, he said. The company is planning to sign a fresh line of credit with German bank KfW Group for 200 million euros ($220 million), adding to a 50 million euro credit line accessed earlier. EESL also has a credit line of 50 million euros from Agence Francaise de Developpement and has raised about 7 billion rupees from other banks and financial institutions.

“We’re currently negotiating with the World Bank Group for a credit line of $300 million and are accessing one for $200 million from the Asian Development Bank," Kumar said.

By the end of the financial year ending in March 2017, EESL wants to double the distribution of LED bulbs for home lighting across the country from 140 million at present.

“We hope an equivalent number happens from the industry, which will help meet the target of 770 million LED bulbs across the country by March 2019,” Kumar said.

Revenue Surging

EESL, whose annual revenue surged 10-fold to 7 billion rupees in the year ended in March compared with a year ago, doesn’t rule out the possibility of an exchange listing.

"In the first quarter of this fiscal, our revenue is half of last year’s already and we’d like to sustain this growth before looking at an IPO in 2017-18," Kumar said.

EESL is a joint venture between the ministry of power, NTPC Ltd., Rural Electrification Corp., Power Grid Corp. of India Ltd., Power Finance Corp. and the Bureau of Energy Efficiency.