Sterling and Wilson’s Q4 Net Loss Grows as Returns from EPC Projects Drop

Revenue from EPC business dropped by 96% YoY to ₹395.8 million


The engineering, procurement, and construction (EPC) arm of Shapoorji Pallonji Group, Sterling and Wilson Renewable Energy’s consolidated net loss widened by 231% to ₹4.21 billion (~$51 million) for the fourth quarter (Q4) of the financial year (FY) 2023 compared to the loss of ₹1.27 billion (~$15 million) in Q4 FY 2022 due to lower returns from EPC projects.

The company also posted a year-over-year (YoY) drop of 60% in revenue for Q4 at ₹880 million (~$11 million). The company said that lower contributions from ongoing EPC projects impacted the revenue for the period.

Revenue from EPC business dropped 96% YoY from ₹10.19 billion (~$123.9 million) in Q4 2022 to ₹395.8 million (~$4.8 million).

Sterling and Wilson said that an increase on account of certain cost provisions, which affected the percentage of completion, led to a revenue reversal in ongoing EPC projects.

Four international projects faced cost overruns due to punch point and handover costs amounting to ₹614.3 million (~$7.4 million), reflecting the fall in revenue.

Also, one of the international projects currently under commissioning is facing challenges in achieving the desired plant output. After a detailed evaluation, Sterling said it has now decided to replace material and ancillary items which are causing the impediment.

Sterling and Wilson recently bagged NTPC’s tender for the balance of system package to develop 1.2 GW solar projects at Khavda renewable park in Gujarat.

During Q4, the company also directed funds to develop, design, construct, and commission solar power projects aggregating 961 MW at five locations in Nigeria, for which it signed a memorandum of understanding with the Federal Republic of Nigeria.

The company’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) loss widened to ₹3.55 billion (~$43 million) for Q4 from ₹820 million (~$10 million) in Q4 2022.

Full Year

Sterling and Wilson’s net loss for FY 2023 widened by 30% to ₹11.75 billion (~$143.11 million) from ₹9.16 billion (~$111.57 million) in the previous year, primarily driven by lower returns from the EPC projects for which the company signed contracts in the year.

As of March 31, 2023, Sterling and Wilson’s order book has unexecuted EPC projects worth ₹49 billion (~$597.8 million), of which around 90% of projects are domestic.

The company recorded a YoY drop of 60% in its total revenue at ₹20.15 billion (~$242.43 million) for FY 2023.

Revenue from the EPC business totaled ₹18.23 billion (~$221.9 million) for the year, down by 63% from ₹49.74 billion (~$605.5 million) in FY 2022.

The company’s EBITDA loss widened by 19% to ₹10.23 billion (~$124.5 million) for FY 2023 compared to a loss of ₹8.62 billion (~$104.9 million) in 2022.

The total revenue of Sterling and Wilson Renewable Energy fell by 73% YoY to ₹4.18 billion (~$51.5 million) in the third quarter of 2023.