Helios Photo in Bankruptcy

Helios Photo Voltaic Enters Bankruptcy: NCLT’s Intervention

Source and Citation: ET Bureau, The Economic Times. ‘Helios Photo in Bankruptcy.’ January 25, 2024.

Table of Contents

Layman’s Analysis

The National Company Law Tribunal (NCLT) has accepted a bankruptcy case against Helios Photo Voltaic Ltd, a solar panel and electrical equipment manufacturer. Oriental Bank of Commerce, now merged with Punjab National Bank, initiated the case over unpaid dues of ₹859 crore. The bad debt was transferred to the National Asset Reconstruction Company (NARCL).

In essence, Helios Photo Voltaic failed to repay loans from Oriental Bank of Commerce, leading the bank to file for bankruptcy to recover the outstanding amount. NCLT approved the case, appointing an insolvency professional to oversee proceedings, including potential acquisition by other firms.

The bankruptcy filing signifies financial challenges for Helios Photo Voltaic, prompting restructuring of its business operations and debt obligations under NCLT supervision.

Impact on Retail Investors

Short-term impacts may affect solar energy stocks like Suzlon Energy, solar panel manufacturers like Indosolar, and engineering firms like KEI Industries or Skipper Ltd. Linked firms’ share prices may experience negativity due to the anticipated industry slowdown.

Regulated utility providers like Tata Power, who purchased Helios’ solar offerings, may benefit from reduced solar equipment costs through potential asset fire sales under bankruptcy.

Long-term benefits could arise from new management post-bankruptcy, potentially revitalizing Helios. Investors should monitor equity performance over a 12-18 month horizon. Analyzing debt exposure levels of other solar product firms and tracking wider industry bad loans at banks is crucial. Despite company-specific issues, the long-term growth story for solar energy in India remains intact.

Impact on Industries

In the short run, the solar energy production industry faces challenges due to Helios Photo Voltaic’s role as a key domestic supplier. Business uncertainty may trigger order reductions, project delays, and increased importer dependence.

Modular panel importers can benefit by capturing Helios’ market share in India over the next 2-3 years. Foreign solar manufacturers may also consider India investments.

The electrical equipment industry, relying on Helios for wires, cables, and components, will experience short-term supply chain constraints, leading to potential cost increases and slowdowns in power infrastructure buildouts.

Long Term Benefits and Negatives

Over 5-10 years, Helios’ bankruptcy could enable consolidation in the domestic solar manufacturing space through distressed M&A deals. This could rejuvenate the sector, aiding India’s renewable energy expansion goals.

However, job security and research & development initiatives are at risk until clarity emerges post-bankruptcy proceedings. The solar industry’s import dependence may persist.

For renewable energy adoption, short-term availability of modular solar panels from imported channels prevents major project slowdowns. Yet, continued dependence on overseas suppliers may persist without Helios.

Short Term Benefits and Negatives

In the immediate 1-2 year period, revenue and production uncertainty for Helios’ solar modules and electrical gear businesses is a key negative. NCLT intervention raises the possibility of retaining Helios as a going concern, preserving infrastructure, employee base, expertise, and client relationships.

For client industries like solar farms, alternate import supply channels offer short-term mitigation, but cost economics may be impacted. Competitors have a window of opportunity to gain market share in affordable solar gear segments.

NCLT’s admission of Helios’ case into bankruptcy prevents potential job losses, opening doors for industry realignment towards sustainable solar equipment manufacturing through M&A activity. Uncertainty persists until credible revival proposals or buyers emerge.

Companies Impacted by Helios Photo Voltaic’s Bankruptcy:

Indian Companies:

Likely to Gain:

Other solar energy companies: With Helios Photo Voltaic out of the picture, there could be increased market share opportunities for existing players like Tata Power Renewable Energy Ltd., Adani Green Energy Ltd., and Vikram Solar Ltd. This could potentially boost their revenue and profitability.
Debt recovery agencies: Companies like Edelweiss ARC, Reliance ARC, and JM Financial ARC might acquire Helios Photo Voltaic’s loan assets from NARCL at a discount. Successful debt recovery and asset restructuring could generate profits for these entities.
Scrap metal and equipment suppliers: Helios Photo Voltaic’s bankruptcy could lead to the liquidation of its manufacturing equipment and scrap materials. Companies dealing in such materials could benefit from potential purchases at discounted prices.

Likely to Lose:

Banks with exposure to Helios Photo Voltaic: While NARCL has already acquired the loans, banks which initially provided Helios Photo Voltaic with loans may face write-offs and reduced profits. This could include Punjab National Bank (PNB), which originally filed the case against the company.
Suppliers and vendors: Companies that supplied raw materials and services to Helios Photo Voltaic may face unpaid dues, impacting their cash flow and profitability.
Employees of Helios Photo Voltaic: The bankruptcy process could result in job losses for employees of the company, impacting their livelihoods and potentially leading to economic uncertainty in the affected region.

Global Companies: