Stocks

Carbon management company EKI Energy to raise ₹18 crore via IPO

M Ramesh Chennai | Updated on March 23, 2021

Indore, Madhya Pradesh based carbon footprint management company EKI Energy Services intends to raise a little over ₹18 crore through its IPO, which opens on Wednesday.

EKI Energy, which operates under the brand name ‘Enking International’, helps its clients achieve carbon footprint neutrality, cut down greenhouse gas emissions, trade in carbon offsets, conduct electrical safety audits and do sustainability reporting. In 2019-20, the company achieved a turnover of ₹66 crore and made a net profit of ₹4.4 crore. In the first six months of 2020-21, its turnover was ₹60 crore and net profit, ₹5.38 crore.

The company has 50.50 lakh equity shares and is issuing an additional 18.24 lakh shares for a subscription. The fixed price band is ₹100 to ₹102, so the company expects to raise between ₹18.24 crore to ₹18.60 crore through the IPO. The shares will be listed on the SME platform of the BSE.

EKI Energy Services has been in business for over 12 years. It counts NTPC, NHPC, Indian Oil Corporation, Indian Railways, SB Energy, The World Bank, and Fortum among its clients. Information made available by the company says that it facilitates the trading of a million carbon offsets every month.

Business Line reported the company’s intention to come out with an IPO in November last year. The company’s Chairman and Managing Director, Manish Kumar Dabkara, told this paper today that the proceeds of the IPO would be used to expand the business, both within and outside India.

The market for carbon offsets is set to boom, especially (if and) after the ticklish issue of rulemaking for the operation of international carbon markets sorted out among the countries that have signed the Paris Agreement. This is likely to happen at the impending Conference of Parties 26 (CoP 26), scheduled to occur in Glasgow, UK, in November. The CoP26 should have happened in November 2020, but the Covic-19 pandemic put it off by a year.

Businesses in the developing countries stand to gain by trading in carbon offsets--the market-tradeable credits they get when they do carbon emission mitigating activities such as putting up renewable energy projects.

There are two kinds of carbon markets -- ‘compliance’ and ‘voluntary’. The voluntary market is the one that is active today, where the buyers of offsets are companies (such as Google and Apple) that have sworn to make their operations carbon neutral. They buy offsets towards this end.

The ‘compliance’ market is essentially the governments’ play. By buying the offsets, the governments of the developed countries pay for greenhouse gas emission-reducing activities in the developing world—the best way to transfer funds is through the instruments of the ‘market’. This compliance market will grow exponentially when the rules for the establishment of the markets are framed. When this happens, companies like EKI Energy Services will get busy.

Published on March 23, 2021

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