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Sterling & Wilson Renewable Energy: From Electrical Contractors to Solar Giants
A tale of partnership, ambition, crisis, and resurrection
I. Introduction & Episode Roadmap
Picture this: A handshake between two friends in 1920s Bombay becomes a century-long business partnership. An electrical contractor serving construction royalty evolves into the world's largest solar EPC provider. Then, almost overnight, drowns in debt and faces extinction. Finally, India's most powerful industrialist steps in to pull it back from the brink.
Sterling & Wilson Renewable Energy is now the leading solar EPC solutions provider in the world, with a presence across 29 countries. But the journey from Wilson Electric Works in the 1920s to a global renewable energy powerhouse—and then to near-bankruptcy—reads like a corporate thriller with lessons for every investor and founder.
This is a story about four critical inflection points: the solar pivot in 2011, the controversial IPO in 2019, the debt crisis that nearly killed the company in 2020-2023, and the Reliance rescue that gave it a second life. It's about how long-term partnerships can build empires, how aggressive growth without discipline destroys value, and how the right financial sponsor can resurrect even the most troubled business.
The themes are universal: execution excellence, working capital intensity, the perils of fixed-price contracts in volatile markets, and the difference between revenue growth and value creation. For fundamental investors, Sterling & Wilson offers a masterclass in what happens when ambition outpaces operational capacity—and what a turnaround looks like when it's done right.
II. The Shapoorji Pallonji & Daruvala Origins (1920s-1970s)
In the sweltering heat of 1920s Bombay, two men forged a friendship that would span generations and build an empire. Shapoorji Mistry Sr. and Mehervan Daruvala formed a business partnership born out of friendship and mutual respect, with Wilson Electric Works serving as an electrical contractor for Shapoorji Pallonji Construction.
The Shapoorji Pallonji Group itself represented construction royalty in India. Founded as Littlewood Pallonji in 1865, the company's first project was the construction of a pavement on Girgaum Chowpatty, followed by a reservoir on Malabar Hill which supplied water to Mumbai for over 100 years. This wasn't just any construction firm—this was the company that would go on to build India's most iconic structures.
The company built landmarks around Mumbai's Fort area, including the Hong Kong Bank, Grindlays Bank, Standard Chartered Bank, Reserve Bank of India building, Bombay Stock Exchange building and Taj Intercontinental. The Shapoorji Pallonji DNA was execution excellence, completing projects on time and building relationships that lasted generations.
Wilson Electric Works, run by the Daruvala family, found its perfect partner. Established in 1927, it soon became an electrical systems contractor for many of SP Group's turnkey projects. The business relationship took a major step forward when the Shapoorji Pallonji Group acquired a 51% stake in Wilson Electrical Works in 1973. The firm was rechristened Sterling and Wilson.
In 1971, Wilson Electric Works merged with Sterling Investments, a group company of the Shapoorji Pallonji Group, to form an EPC powerhouse called Sterling and Wilson. The name change symbolized something deeper—two families, two legacies, becoming one entity. The Mistry & Daruvala families have been partners in S&W for over three generations.
What made this partnership work? Trust built over decades. The Mistrys were Parsi construction aristocracy with deep connections to India's industrial elite—they would eventually become the largest shareholder in Tata Sons. The Daruvalas brought technical expertise and operational excellence. Neither family dominated; both contributed. This wasn't a typical Indian family business with a single patriarch—this was a genuine multi-generational partnership between two families who genuinely liked and trusted each other.
The DNA this created would prove crucial: a bias toward quality over quick profits, relationships over transactions, and long-term thinking over quarterly results. These values would carry Sterling & Wilson to the top of the solar EPC world—and ironically, their temporary abandonment would nearly destroy it.
III. Building an EPC Empire: MEP & Infrastructure (1970s-2000s)
With the 1971 merger complete, Sterling and Wilson didn't stay local for long. The new entity commenced operations in the 1970s with a few large-scale projects in the Middle East, further venturing into the Asian subcontinent and various other countries.
The timing was perfect. The 1970s oil boom transformed the Gulf into the world's largest construction site. While other contractors chased quick profits, Sterling & Wilson leveraged its Shapoorji Pallonji pedigree to win turnkey MEP (Mechanical, Electrical, Plumbing) contracts for premium projects. The company built relationships with developers who valued execution certainty over the lowest bid.
The business model was straightforward but capital-intensive: Engineering, Procurement, and Construction (EPC) contracts. Clients wanted a single throat to choke—one company responsible for design, procurement of all materials, construction, and commissioning. The EPC contractor took all execution risk in exchange for a fixed price.
This model had beautiful economics when it worked: minimal capital expenditure (you don't need to own factories), scalable based on order book, and recurring relationships with blue-chip clients. But it had a dark side: working capital intensity. You had to pay suppliers in 30-60 days while clients paid you in 90-120 days. You bore all cost overruns. And if you missed deadlines, liquidated damages could wipe out your margins entirely.
Sterling & Wilson's competitive advantage was simple: it delivered on time and on budget. In construction, reliability is worth a premium. Developers knew that an SP Group company wouldn't cut corners or abandon projects halfway. Over time, the company diversified into MEP contracting, diesel-based power, solar EPC, and turnkey infrastructure.
By the 2000s, Sterling & Wilson had become one of India's most respected MEP contractors with a global footprint. The company had built data centers, installed diesel generators, wired skyscrapers, and executed infrastructure projects across Asia, the Middle East, and Africa. Revenue was in hundreds of crores, margins were respectable, and the business was profitable.
But the Mistry and Daruvala families saw a bigger opportunity brewing—one that would transform Sterling & Wilson from a respected contractor into a global giant.
IV. The Solar Pivot: Seizing the Renewable Energy Wave (2011)
THE FIRST INFLECTION POINT
The year 2011 marked a turning point. The Solar EPC Division of Sterling and Wilson Private Limited commenced operations in 2011 to tap into the growing renewable energy market.
Global forces were aligning: Solar module prices were plummeting as Chinese manufacturing ramped up. India launched its National Solar Mission targeting 20 GW by 2022. Climate policy was shifting. And most importantly, solar EPC was a natural extension of Sterling & Wilson's core competencies—large-scale project management, electrical engineering, and execution excellence.
The opportunity was massive but the competitive landscape was wide open. Indian power companies knew thermal plants but not solar. Chinese manufacturers could make modules but didn't do turnkey projects. International solar developers wanted execution partners who understood emerging markets. Sterling & Wilson spotted a white space.
When Sterling & Wilson Renewable Energy started operations in 2011, there was a single mission: to become the largest Solar EPC player in the world. By 2019, right around the time of IPO, Sterling & Wilson succeeded in achieving this mission—but that success came at a cost.
The growth was breathtaking. Sterling & Wilson leveraged its SP Group relationships to win initial projects, then used those references to expand globally. By 2018, Sterling and Wilson Solar was the world's largest pure-play solar EPC company with 4.6% global market share, and the largest in each of India (17% market share), Africa (37%) and Middle East (40%).
The strategy was aggressive: bid competitively to build scale, execute flawlessly to build reputation, then use that reputation to command premium pricing. Geographic diversification reduced concentration risk. The company moved from India to the Middle East to Africa to Latin America, building massive utility-scale projects in every region.
By 2018, Sterling and Wilson was the world's largest solar EPC solutions provider based on annual installations of utility-scale PV systems of more than 5 MWp. The company had installed over 6 GW of solar capacity globally. It had become the go-to partner for developers building large solar parks.
What enabled this meteoric rise? First, genuine expertise—decades of electrical contracting created an engineering culture that could solve complex problems. Second, execution credibility from the SP Group legacy. Third, an asset-light model that could scale quickly without massive capital requirements. Fourth, relationships with module suppliers who would extend credit. And fifth, aggressive bidding to capture market share.
But hidden beneath the spectacular revenue growth were warning signs that would later prove catastrophic: projects won at razor-thin margins, international contracts with unfamiliar counterparties, working capital cycles stretching longer, and a balance sheet increasingly supported by related-party debt.
The race to become #1 globally had been won. Now came the decision that would define the next chapter: taking the company public.
V. The Demerger & IPO: Going Public (2017-2019)
THE SECOND INFLECTION POINT
Sterling and Wilson Solar Limited was subsequently demerged in 2017. The solar business had grown so large that it warranted its own listed vehicle. Previously named Rashmika Energy Private Limited, the company started operations as a Solar EPC Division of SWPL in 2011 and demerged on April 1, 2017.
The Sterling & Wilson IPO opened on August 6, 2019 and closed on August 8, 2019. The shares got listed on BSE and NSE on August 20, 2019. The IPO offered 3,65,33,820 equity shares priced at ₹780 per share. The structure was unusual—100% offer for sale (OFS), meaning no fresh capital raised for the company. The promoters of the Company were Shapoorji Pallonji and Company Pvt Ltd and Khurshed Yazdi Daruvala.
The market's reception was lukewarm. The company raised Rs 2,850 crore from its IPO before expenses and taxes, compared with the initial expected Rs 4,500 crore. The issue was subscribed 92 percent, with global institutional buyers picking up the bulk of shares. The QIB portion received full subscription, while the high net-worth investors bought 89 percent of the shares allocated to them. The retail portion witnessed 30 percent subscription.
Why the skepticism? The debt controversy. In the process of demerger, loans to related parties of Rs 1,935 crore came on the company's balance sheet as of March 31, 2019, against a corresponding low-cost short term borrowing on the liability side. While the company would not directly receive any proceeds from the offer, its debt of nearly Rs 2,000 crore (debt equity ratio of 2.1:1) would stand eliminated as an outcome of the IPO.
Here was the issue: Sterling & Wilson Solar had extended loans to fellow subsidiaries in the SP Group. These intercorporate loans created a maze where the IPO proceeds from selling shares would go to promoters, who would then use those proceeds to repay loans back to the company. The RHP assured investors that both the promoters would utilize part of IPO proceeds to fully repay these loans within 90 days from listing.
Analysts raised eyebrows. In essence, the IPO was facilitating correcting the anomaly on the balance sheet, which if not attended to, could raise potential corporate governance questions. The structure felt circular—minority shareholders were essentially funding the unwinding of related-party transactions.
The financial performance looked strong on paper. FY19 revenue of Rs 8,240 crore rose 20% YoY, with Middle East and Africa accounting for 48% revenue share, followed by India at 30%. EBITDA margin came at 7.8%, same as FY18. But margins in Q4FY19 spiked to 14.3% (EBITDA)—levels never recorded in company's history—which looked unsustainable.
Additional red flags: The company had faced project delays in Argentina, Namibia, Morocco and Zambia in the past which could harm reputation and financials. Global operations, although fetching higher margins, were difficult to execute and subject to very high geographic, political and economic risk.
The stock listed and quickly ran into trouble. Within months, storm clouds gathered—not from operational issues, but from the very debt that the IPO was supposed to solve.
VI. The Near-Death Experience: Debt Crisis & Downgrade (2019-2021)
THE THIRD INFLECTION POINT
The post-IPO euphoria lasted approximately three months. Promoters Shapoorji Pallonji and Khurshed Yazdi Daruvala had put on the block shares worth Rs 2,083 crore and Rs 1,042 crore respectively in the IPO. Promoters had committed to repay the company's inter-corporate loan within 90 days of listing, which was now being reworked.
Sterling & Wilson Solar's shares fell 20 percent to Rs 400.7 apiece on November 15, 2019 after the bombshell announcement. Promoters Shapoorji Pallonji and Company Pvt Ltd and Khurshed Daruvala were scheduled to pay Rs 2,563 crore to Sterling & Wilson Solar by November 18, of which Rs 2,335 crore was principal and the remaining was interest. They couldn't pay.
The change in repayment terms was a breach of trust for shareholders and a case for the market regulator to step in for not fulfilling the objective or purpose of the prospectus. The stock cratered. Minority shareholders were furious. The IPO's primary objective—debt repayment within 90 days—had failed.
But this was just the beginning. The real problems ran deeper than related-party loans. Sterling & Wilson's aggressive international expansion was backfiring spectacularly. Projects in Argentina faced delays due to high-velocity winds. Namibia deals were disrupted by transporter strikes. Morocco projects encountered extreme weather and topographical challenges. Projects in Argentina, Namibia, Morocco and Zambia faced delays due to various reasons including extreme weather conditions and certain topographical challenges like sinkholes and limestone.
The working capital crunch intensified. Solar EPC has brutal economics: you pay module suppliers upfront, mobilize labor and equipment, execute projects over 6-12 months, then wait another 90-120 days for full payment. Any delay in client payments or cost overruns on projects creates a cash drain. Sterling & Wilson was executing dozens of projects across emerging markets, each with its own payment risks.
Then COVID-19 hit. In 2020, the Shapoorji Pallonji Group and co-promoter Daruvala failed to honor their commitments made during the IPO because of liquidity crisis. They said, "This amount includes Rs 500 crore paid on March 31, 2020 despite the country entering into a complete economic and social lockdown due to the spread of COVID-19. COVID-19 has created a significant disruption to economic activity in India and globally".
Project suspensions, supply chain disruptions, and lockdowns compounded the crisis. A year since listing, Sterling and Wilson Solar was still awaiting full payment of the intercorporate loan. The company extended the repayment timeline by one year. Promoters had expressed inability to fund the June 2020 installment and the September installment too, because of Covid-19 and related reasons.
The debt spiral was intensifying. On a consolidated basis, credit metrics deteriorated in FY23 as the company took on significant debt to cater to working capital needs and offset operational losses from ongoing international projects. The company's gross debt surged to around Rs 2,000 crore at end of FY23, compared to Rs 435 crore in FY22. Additionally, SWREL issued commercial paper worth Rs 100 crore, bringing net debt to Rs 2,100 crore as of June 30, 2023.
Then came the crushing blow. In September 2023, India Ratings downgraded Sterling and Wilson Renewable Energy Ltd's bank facilities from "BB-" to "D" due to delays in servicing its debt obligations caused by its weakened liquidity position. A "D" rating meant default.
India Ratings mentioned SWREL's due repayment of Rs 426.1 crore in September 2023, of which Rs 217.7 crore went unpaid due to inadequate funds. The agency predicted that internal cash flow would not cover the scheduled repayments of Rs 332.3 crore for October 2023. India Ratings predicted that SWREL's credit profile would remain under strain.
The stock price told the story. From an IPO price of â‚ą780, shares collapsed to under â‚ą100. Market capitalization evaporated. Institutional investors took massive losses. The company that was the world's #1 solar EPC provider just four years earlier was now facing existential crisis.
Could Sterling & Wilson survive? Would the SP Group let its prized asset die? Or would a white knight emerge?
VII. The Reliance Rescue: New Promoters, New Hope (2021-2022)
THE FOURTH INFLECTION POINT
In October 2021, an announcement stunned India's renewable energy sector. Reliance New Energy Solar Ltd executed definitive agreements with Shapoorji Pallonji and Company Private Ltd, Khurshed Daruvala and Sterling & Wilson Solar Ltd to acquire 40% stake through: a) Preferential allotment of 2.93 crore equity shares at Rs 375 per share; b) Acquisition of 1.84 crore equity shares from SPCPL at Rs 375 per share; c) Public announcement to acquire up to 4.91 crore equity shares representing 25.9%.
Why would Mukesh Ambani's Reliance rescue a troubled solar EPC contractor? The strategic logic was compelling. In June 2021, Mukesh Ambani announced that Reliance Industries would invest â‚ą750 billion (~$10 billion) to build an integrated solar PV factory, advanced energy storage battery manufacturing unit, green hydrogen, and fuel cell facility in Gujarat's Jamnagar.
Reliance was making a massive pivot to renewable energy. But Ambani understood something crucial: owning solar manufacturing capacity was pointless without execution capability. The acquisition would help Reliance access talent, engineering, project management, execution skills, and digital technology to implement giga-scale solar energy capacity in India and worldwide.
Sterling & Wilson wasn't just buying an EPC contractor—it was acquiring the project management expertise of 4,000+ engineers who had built some of the world's largest solar parks, relationships with every major developer and IPP, and the ability to execute projects across 25+ countries. This was talent and know-how that couldn't be built overnight.
On February 9, 2022, Reliance purchased 19.66 million Sterling and Wilson Renewable Energy shares in an off-market deal at â‚ą375 per share. By February 2022, Reliance completed the acquisition of a 40% stake in Shapoorji Pallonji Group's Sterling & Wilson Renewable Energy Ltd for Rs 2,845 crore.
The deal structure showed Ambani's shrewdness: Reliance had announced two back-to-back acquisitions in October 2021—a $771 million buyout of Norway-based solar panel manufacturer REC Solar Holdings and the purchase of a 40% stake in Sterling & Wilson. REC gave Reliance module manufacturing; Sterling & Wilson gave execution capability. Together, they formed an integrated renewable energy platform.
Critically, Khurshed Daruvala would continue to be Chairman of the Board and lead the next phase of growth. Reliance understood that replacing management during a turnaround would be disastrous. The Daruvala family had built Sterling & Wilson over generations; their institutional knowledge and industry relationships were irreplaceable.
But Reliance wasn't a passive financial investor. The company effectively had three promoter groups: Shapoorji Pallonji, the Daruvalas and Reliance. While Reliance was the largest shareholder, the board chairman remained Khurshed Daruvala. There were six board seats with Reliance represented by 3 and remaining 3 distributed between Daruvalas and Mistrys.
As of March 2025, Reliance held 32.5% and Shapoorji Pallonji 6.9% stake in the company. The SP Group had largely exited—selling down from 65.77% in 2019 to just 6.9% by 2025—monetizing what they could while the business recovered.
The capital infusion provided immediate breathing room. Debt could be restructured. Bank guarantees could be strengthened. Most importantly, suppliers and clients regained confidence. A Sterling & Wilson backed by Reliance Industries wouldn't default mid-project.
But capital alone doesn't fix broken operations. The real turnaround work was just beginning.
VIII. The Turnaround Playbook: Operations & Strategy Reset (2022-2024)
With Reliance's backing secured, Sterling & Wilson executed a systematic operational turnaround. The playbook had five elements: geographic rationalization, product expansion, working capital discipline, debt reduction, and order book rebuilding.
Geographic Rationalization
The aggressive international expansion that had fueled growth pre-IPO was also bleeding cash. Sterling & Wilson made the painful but necessary decision to exit or wind down risky markets. The focus shifted to stable geographies: India (where payment discipline was improving), Middle East (where long-standing relationships existed), and select African markets with strong sponsors.
Projects in distant emerging markets with weak counterparties and long payment cycles were either completed and exited or not rebid. The company essentially swallowed the losses from Argentina, Namibia, and other problem projects, took provisions, and moved on.
Product Expansion
Sterling and Wilson Renewable Energy Limited expanded its renewable energy offerings to include EPC solutions for Hybrid Energy and Energy Storage. The solar-only model was limiting. India's renewable targets increasingly required hybrid projects (solar + wind) and battery storage to provide dispatchable power.
SWREL received an order for setting up a standalone battery energy storage plant with cumulative capacity of 1 GWh (500 MW x 2 hours) in Rajasthan. This GWh scale project was India's largest BESS project and one of very few projects of GWh scale globally in a single location to be executed by 2025. The total installed capacity of BESS in India stood at only 219 MWh as of March 2024.
Sterling and Wilson secured EPC contracts for a 1 GWh standalone battery energy storage project in Rajasthan and a 20 MW floating solar plant in Karnataka. By moving into BESS, wind, and floating solar, Sterling & Wilson was positioning for India's next wave of renewable tenders, which would increasingly specify firm, dispatchable power.
Working Capital Improvements
The single most critical metric for an EPC contractor is debtor days—how long it takes to collect payment from clients. Debtor days improved from 105 to 72.6 days. This wasn't magic; it required brutal discipline: focusing on clients with strong payment track records, negotiating advance payment terms, refusing to work with slow-paying developers, and aggressively following up on receivables.
Better working capital meant less need for debt. It meant cash could fund new projects instead of bridging old receivables. It created a virtuous cycle.
Debt Reduction
By FY24, there was significant strengthening of FY24 balance sheet and a net debt reduction by over 90% that positioned the company well to secure a larger portion of industry growth. The combination of Reliance capital, improved collections, and operational cash flow allowed Sterling & Wilson to pay down its crippling debt burden.
Order Book Momentum
Most impressively, Sterling & Wilson started winning marquee projects again. Sterling and Wilson emerged as the L1 bidder for the balance of system package comprising four blocks of 1,255 MW solar projects for NTPC Renewable Energy at Khavda Renewable Park in Gujarat. The total contract value, including three years of O&M, was about â‚ą22 billion.
The company's unexecuted order value grew substantially to INR 8,084 crore as of March 2024, 64% up compared to INR 4,913 crore as of March 2023. Orders for projects worth INR 6,023 crore were received in FY 2024 against new order inflow of INR 4,387 crore in FY 2023.
Clients included NTPC, JSW, Aditya Birla, Sembcorp, and Brookfield—exactly the blue-chip sponsors Sterling & Wilson had built its reputation serving. The company was regaining market trust.
Return to Profitability
Sterling and Wilson reported consolidated revenue of INR 3,035 crore in FY 2024, 51% up year-on-year. The company stated that revenue grew significantly both YoY and sequentially due to execution pace picking up in domestic projects in Q4. The company turned EBITDA positive at INR 54 crore in FY24 backed by robust growth in domestic EPC business.
For Q4 FY25, consolidated net profit surged to â‚ą55.38 crore, up over 3,720% from â‚ą1.45 crore in Q4 FY24. For full FY25, Sterling and Wilson posted consolidated net profit of â‚ą85.55 crore, against a net loss of â‚ą210.79 crore in FY24.
The trajectory was clear: from losses to break-even to profitability, from debt default to net cash positive, from order book decline to record highs. Sterling & Wilson was genuinely turning around.
But turnarounds are fragile. Execution missteps, margin pressure, or working capital slippages could unravel progress quickly. Was this sustainable?
IX. The Competitive Landscape & Market Dynamics
To understand Sterling & Wilson's prospects, you must understand the solar EPC market—both globally and in India specifically.
Global Solar EPC Players
The global solar EPC market is fragmented with regional champions. Chinese players dominate domestically but rarely venture abroad. European firms like Belectric focus on developed markets. In emerging markets, execution capability matters more than pure cost.
Sterling & Wilson's competitive position was built on three pillars: scale (having done 11+ GW created operational leverage), track record (low default rate on completion timelines), and O&M capabilities (recurring revenue post-project). Sterling and Wilson emerged as one of the top EPC service-providing companies in Mercom's India Solar Market Leaderboard 2021, leading the segment with 12% market share.
India's Renewable Energy Ambitions
India has committed for a goal of 500 GW renewable energy capacity by 2030. India set a target of producing 175 GW by 2022 and 500 GW by 2030 from renewable energy. As of February 28, 2025, India's installed solar capacity stood at approximately 102.57 GW. To meet the 500 GW target, solar energy would need to contribute nearly 300 GW.
The math is straightforward: India needs to add approximately 40 GW of solar annually from 2025-2030 to hit its target. That creates a massive addressable market for solar EPC players. But it also means intense competition and margin pressure.
The EPC Margin Squeeze
Solar EPC economics are brutal. Modules are commoditized—everyone sources from the same Chinese manufacturers. Balance-of-system components (inverters, structures, cables) have minimal differentiation. Labor is competitive. So differentiation comes from execution speed, relationship with sponsors, and ability to manage working capital.
Margins reflect this reality. Typical solar EPC margins range from 5-8% EBITDA in competitive markets. Premium projects with complex engineering (floating solar, hybrid with storage, high altitude) can achieve 10-12%. But commodity ground-mounted solar in competitive markets might deliver just 3-5%.
The margin squeeze is intensifying as Chinese EPC players expand internationally and Indian players compete aggressively for domestic market share. Module price volatility creates additional risk—if prices spike after you've bid a fixed-price contract, your margins evaporate.
Differentiation: Scale, Execution, O&M
Sterling & Wilson's competitive moat is narrow but real. Scale matters—having built some of the world's largest solar parks (including the 1.17 GW project in Abu Dhabi and projects at Khavda Solar Park) creates engineering know-how that smaller players lack. Track record matters—developers value EPC contractors who finish on time because project delays trigger cascading problems with financing, grid connection, and offtake agreements.
O&M provides a steadier revenue stream. SWREL manages an O&M portfolio of 7.8 GWp solar power projects, including projects constructed by third parties. O&M margins (15-20%) are better than EPC (5-8%) and revenue is recurring over 5-25 year contracts. It's not transformational economics, but it provides stability.
The BESS Opportunity
Battery Energy Storage Systems represent Sterling & Wilson's biggest growth opportunity. The total installed capacity of BESS in India stood at only 219 MWh as of March 2024. As per the National Electricity Plan 2023, the energy storage capacity requirement is projected to be 82.37 GWh (47.65 GWh from pumped storage and 34.72 GWh from BESS) in 2026-27.
India needs to go from 219 MWh to 34,720 MWh of BESS by 2026-27—a 158x increase in three years. Whoever captures this market will enjoy less competition, better margins, and first-mover advantages in project structuring and financing. Sterling & Wilson's 1 GWh Rajasthan project positions it as an early leader.
Why EPC is Hard
Despite attractive end markets, solar EPC remains a difficult business. You're taking execution risk on fixed-price contracts in volatile markets. Module prices can swing 30-40% in months. Forex fluctuations impact international projects. Clients push for longer payment terms while suppliers demand quicker payment. Liquidated damages clauses can wipe out profits. And you're competing against dozens of hungry players willing to bid aggressively for market share.
Sterling & Wilson learned these lessons the hard way between 2018-2021. The question is whether the turnaround has genuinely changed the company's DNA or whether growth pressures will tempt management to repeat past mistakes.
X. Business Model Deep Dive & Unit Economics
EPC Revenue Model
Sterling & Wilson's core revenue comes from fixed-price EPC contracts for utility-scale solar projects. A typical contract structure:
- Engineering & Design: Sterling & Wilson designs the plant layout, electrical architecture, and civil works (5-10% of project cost)
- Procurement: Purchase and delivery of modules, inverters, structures, cables, and transformers (70-75% of project cost)
- Construction: Civil works, installation, grid connection, and commissioning (15-20% of project cost)
- Testing & Handover: Performance validation and transfer to client
Revenue is recognized using percentage-of-completion method. As the project progresses, proportionate revenue is booked. This creates timing risk—if projects run over schedule, revenue recognition gets delayed even as costs continue.
O&M: Recurring Revenue Stream
Post-construction, Sterling & Wilson offers O&M services under 5-25 year contracts. Services include module cleaning, inverter maintenance, vegetation management, performance monitoring, and minor repairs. Clients prefer bundling O&M with EPC because the constructor knows the plant intimately and has skin in the game for long-term performance.
O&M revenue is predictable and recurring. Margins are better than EPC (15-20% vs 5-8%) because it's less competitive and requires less capital. The downside: O&M contracts are relatively small—a 100 MW plant might generate ₹50-100 crore over its lifetime in O&M revenue, versus ₹400-500 crore in upfront EPC revenue.
Geographic Revenue Mix
Historically, Sterling & Wilson derived 60-70% revenue from international projects (Middle East, Africa, Australia, Latin America) because those markets paid better margins. However, the debt crisis forced a pivot back to India. Over 84% of the UOV is tied to Indian projects, while the remaining comprises two projects each in Europe and South Africa.
This is both good and bad. Good because Indian projects have better payment discipline (especially PSU clients like NTPC, SECI) and lower execution risk. Bad because Indian margins are lower (6-7% vs 8-10% internationally) due to intense competition.
Margin Profiles: EPC vs O&M
- Solar EPC EBITDA margins: 5-8% in competitive markets, 8-12% for complex projects
- Hybrid/BESS EPC margins: 10-15% (less competition, more engineering content)
- O&M margins: 15-20% (recurring, labor-light, minimal capital)
- Blended company-level margins: Target of 8-10% EBITDA
Sterling & Wilson's FY24 EBITDA was ₹54 crore on revenue of ₹3,035 crore—just 1.8% margins. This reflects the turnaround phase with legacy loss-making projects still bleeding. The target is to reach sustainable 8-10% margins as the order book shifts to profitable projects.
Working Capital Intensity
This is the killer. Solar EPC requires negative working capital:
- Pay module suppliers: 30-60 days
- Pay labor and contractors: 30 days
- Collect from clients: 90-120+ days
The 60-90 day gap must be financed with debt. On a â‚ą500 crore project, you might need â‚ą150-200 crore in working capital for 3-6 months. Multiply that by 20-30 concurrent projects and you're carrying â‚ą2,000-3,000 crore in working capital. If clients delay payment or if you have project cost overruns, that working capital balloons.
Sterling & Wilson's working capital crisis stemmed from international projects with extended payment cycles (120-150 days) and problem projects requiring additional capital injections. The improvement from 105 debtor days to 72.6 days freed up hundreds of crores in working capital.
Project Execution Risk
Fixed-price contracts transfer all execution risk to Sterling & Wilson: - Module price risk: If prices spike, margins disappear - Forex risk: For international projects denominated in USD - Execution delays: Trigger liquidated damages (typically 0.1-0.5% per week of delay, capped at 10%) - Performance guarantees: Typically 2-5 years post-commissioning with financial penalties for underperformance
The Importance of Blue-Chip Clients
Sterling & Wilson's recovery hinges on working with high-quality sponsors. NTPC, SECI, JSW, Aditya Birla, and Sembcorp pay on time, have reasonable contract terms, and won't nickel-and-dime on change orders. Chasing low-quality clients for revenue growth was a key mistake during 2018-2020. The disciplined approach now—walking away from risky tenders—reflects hard-won wisdom.
XI. Playbook: Business & Investing Lessons
The Power (and Peril) of Long-Term Family Partnerships
The Mistry-Daruvala partnership created Sterling & Wilson and sustained it through three generations. The friendship between Meherwan Daruvala and Shapoorji Sr. fostered a global engineering powerhouse built on a relationship spanning 3 familial generations. The Mistry & Daruvala families have been partners for over three generations.
This multi-generational trust enabled patient capital, shared risk-taking, and alignment through cycles. When one partner faced liquidity problems, the other supported them. The partnership's strength was also its weakness—when both families faced simultaneous liquidity crises (SP Group's Tata Sons dispute and broader real estate challenges), Sterling & Wilson had no financial backstop.
Lesson: Multi-generational partnerships create unique competitive advantages but require independent financial strength. Over-leverage destroys even the best partnerships.
When Aggressive Growth Destroys Value
Sterling & Wilson's race to become #1 globally was strategically sound but operationally reckless. Bidding aggressively to gain market share works when you maintain discipline on client selection, contract terms, and execution capability. Sterling & Wilson sacrificed these for growth, taking on projects in geographies where it lacked relationships, with clients who had payment issues, under contract terms that left no buffer for problems.
When operations commenced in 2011, there was a single mission: to become the largest Solar EPC player in the world. By 2019, Sterling & Wilson succeeded but that success came at a cost. The cost: destroyed shareholder value, a near-bankruptcy, and years of turnaround work.
Lesson: Revenue growth is not the same as value creation. Fast growth with poor unit economics destroys businesses. Growth should follow profitability, not precede it.
Capital Structure Matters: Debt Can Kill Good Businesses
Sterling & Wilson's operational troubles were manageable—some problem projects, working capital timing issues. But high leverage turned manageable problems into existential crisis. With ₹2,000 crore in debt and weak cash flow, the company couldn't weather even modest turbulence.
The IPO was supposed to solve the debt problem through promoter loan repayment. But the circular structure (OFS → promoters → loan repayment) and promoters' own liquidity crisis meant the debt never got repaid. This violated the fundamental IPO promise to minority shareholders.
Lesson: Debt magnifies both good and bad outcomes. In businesses with volatile cash flows (like EPC), conservative leverage is essential. Capital structure is a strategic choice, not just a financing decision.
The Value of a Financial Sponsor
Reliance's acquisition saved Sterling & Wilson not because of capital alone (though that helped) but because of three factors:
- Credibility: Reliance backing eliminated counterparty risk concerns. Suppliers extended credit. Clients awarded contracts.
- Strategic alignment: Reliance needed Sterling & Wilson's execution capability for its renewable build-out, creating natural synergies.
- Patient capital: Reliance had a 10+ year horizon and could stomach short-term losses for long-term position-building.
Lesson: The right financial sponsor provides more than money—they provide credibility, strategic support, and patience. Choose sponsors aligned with your business, not just highest bidder.
Turnaround Investing: Timing is Everything
Peter Lynch famously said turnarounds seldom turn. Sterling & Wilson survived because: - Core business wasn't broken (clients still wanted its services) - Management continuity (Daruvala family stayed, bringing institutional knowledge) - Right sponsor at right time (Reliance in 2021, not 2019) - Market tailwind (India's 500 GW renewable target created demand surge)
Investing in turnarounds requires extreme patience and conviction that the core business model is sound. Most turnarounds fail because the business itself is structurally challenged, not just temporarily troubled.
Lesson: Turnarounds are risky but can generate exceptional returns if you get timing right. Look for: capable management staying, clearing financial sponsor, improving industry fundamentals, and genuine operational fixes (not just financial engineering).
Industry Selection: Renewable Energy is Opportunity and Minefield
India's renewable energy build-out creates massive opportunities—40 GW annual solar additions, 80+ GWh BESS deployment, hybrid projects requiring complex engineering. But it's also a graveyard of failed companies: Suzlon (debt trap), Moser Baer (technological obsolescence), multiple solar manufacturers (Chinese competition).
The industry has three challenges: 1. Commoditization: Modules and many components are commodities with razor-thin margins 2. Policy risk: Renewable subsidies, tariffs, and regulations change frequently 3. Capital intensity: Requires significant working capital and project financing
Winners in renewable energy either control proprietary technology, have unmatched execution capability, or vertically integrate. Sterling & Wilson bets on #2—execution capability at scale. It's a defensible position but requires constant operational excellence.
Lesson: Growth industries attract capital and competition, compressing returns. Sustainable competitive advantages matter more in hot sectors, not less.
The SP Group Legacy: Trust, Quality, Relationships
What enabled Sterling & Wilson's turnaround was the institutional trust built over decades. When clients saw Sterling & Wilson on a tender, they knew: this company finishes projects, meets deadlines, and stands behind its work. That brand equity—built by Shapoorji Pallonji over 150+ years—couldn't be replicated by competitors.
The SP Group's construction legacy meant relationships with every major developer, government entity, and corporate buyer in India and the Middle East. These relationships survived even the debt crisis because they were built on generations of delivering quality.
Lesson: Brand and reputation take decades to build but can save a business in crisis. Quality compounds. The companies that survive 100+ years do so by never compromising on delivery, even when times are hard.
Corporate Governance: Multi-Promoter Complexity
Sterling & Wilson's governance structure—two family promoters plus Reliance, with board seats split between three groups—creates potential for conflict. Who makes strategic decisions? What happens if Reliance wants to pivot the business for its own benefit versus what's best for minorities?
So far, the arrangement has worked because interests align: Reliance needs strong Sterling & Wilson performance, Daruvala family retains operational control, and minorities benefit from turnaround. But inherent tensions exist in multi-promoter structures.
Lesson: Multi-promoter structures require clear governance, aligned incentives, and transparent decision-making. Investors should monitor for conflicts and favor companies where all shareholders have aligned interests.
XII. Analysis & Bear vs. Bull Case
Bull Case: From Crisis to Market Leader
Reliance Backing Provides Stability and Strategic Support
In 2022, Reliance Industries acquired a 40% stake in the Company through its subsidiary Reliance New Energy Limited. As of March 2025, Reliance held 32.5% stake. Reliance's involvement isn't passive—it's strategic. As Reliance builds out 100 GW of solar capacity, Sterling & Wilson becomes the execution arm. Reliance REC manufacturing can supply modules; Sterling & Wilson installs them. The vertical integration creates competitive advantages neither had independently.
India's Renewable Targets Create Massive Addressable Market
With 300 GW of solar needed by 2030 and current capacity at just 102 GW, India must add 40 GW annually. Sterling & Wilson with 12% market share could theoretically capture â‚ą20,000-25,000 crore in annual revenue at current run rates. Add in BESS (80 GWh needed by 2027), hybrid projects, and O&M, and the total addressable market is enormous.
Order Book Momentum from Blue-Chip Clients
Sterling & Wilson's unexecuted order value stands at over ₹9,096 crore, providing significant revenue visibility. Over 84% of UOV is tied to Indian projects. Clients include NTPC, JSW, GIPCL, Sembcorp, and NTPC Renewable Energy—exactly the kind of high-quality sponsors that pay on time and offer reasonable contract terms.
Improved Operational Metrics and Margin Trajectory
Debtor days improved from 105 to 72.6 days. Net debt reduced by over 90%. FY25 consolidated net profit was â‚ą85.55 crore against a net loss of â‚ą210.79 crore in FY24. The operational metrics show genuine turnaround, not just financial engineering. Margins are improving, working capital is under control, and profitability is sustainable.
Expanding into Energy Storage and Hybrid Solutions
BESS represents a blue-ocean opportunity with less competition, better margins (10-15% vs 5-8% for solar), and first-mover advantages. Sterling & Wilson secured a 1 GWh standalone BESS plant in Rajasthan, India's largest such project. Early leadership in BESS positions Sterling & Wilson for the next wave of renewable infrastructure build-out.
Track Record of Execution at Scale
Having built some of the world's largest solar parks gives Sterling & Wilson engineering capabilities that smaller competitors lack. Complex projects—floating solar, high-altitude installations, hybrid solar-wind-BESS—require deep engineering expertise and project management sophistication. Sterling & Wilson's 11+ GW installed capacity creates a moat based on operational know-how.
Bear Case: Structural Challenges Remain
EPC Margins Remain Structurally Challenged
Solar EPC is inherently low-margin. Modules are commodities. Installation is labor-intensive with minimal barriers to entry. Twenty Indian and international competitors bid on every major tender. The result: sustained margin pressure. Even with improved operations, EBITDA margins of 8-10% are ceiling, not floor. A bad project or two can wipe out annual profits.
Competition from Chinese and Local Players Intensifying
Chinese EPC giants are expanding internationally, bringing low-cost execution and integrated module supply. Indian players like Waaree, Tata Power Solar, and Adani Green are vertically integrating and bidding aggressively. New entrants see India's 500 GW target and flood the market. Competition is intensifying, not abating.
History of Project Delays and International Execution Issues
Sterling & Wilson faced project delays in Argentina, Namibia, Morocco and Zambia. Global operations, although fetching higher margins, are subject to very high geographic, political and economic risk. While the company has rationalized geographies, the fundamental challenge remains: international projects offer better margins but higher risk. Can management resist the temptation to chase international growth?
Stock Has Delivered Negative Returns Over 3 Years
From the August 2019 IPO price of â‚ą780 to current levels around â‚ą225-250 (as of October 2025), investors have lost 65-70% over six years. While the turnaround is progressing, equity holders have been severely diluted and value destroyed. Rebuilding shareholder trust takes time, and the stock may remain range-bound for years.
Working Capital Intensity Remains High
Working capital needs, while improved, remain significant. Outstanding debtors were 2.8 months as of March 31, 2019. Even with improved debtor days, EPC business requires carrying 60-90 days of receivables. Any slowdown in collections or payment delays from clients immediately creates liquidity stress. One major client defaulting could trigger another crisis.
Regulatory and Tax Litigation Exposure
Sterling & Wilson has ongoing tax disputes, regulatory filings, and contractual disputes related to legacy projects. During Q2 FY26, the Arbitral Tribunal dismissed claims of Rs 485.64 crore by a subsidiary and granted the subcontractor a claim of Rs 56.80 crore plus interest. The Group charged off Rs 580.10 crore including estimated legal costs as an exceptional item. Legacy issues can create unexpected earnings hits.
Past Mistakes Haven't Been Fully Resolved
The promoter loan repayment saga damaged investor trust. The aggressive international expansion destroyed value. The debt crisis nearly killed the company. While management is executing well on the turnaround, the question remains: has Sterling & Wilson's culture genuinely changed, or will growth pressures tempt similar mistakes in future cycles?
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