Urja Global Ltd - Bullish or Bullshit Green Energy

18x growth! That’s how much India’s installed solar power capacity has grown in just 7 years. The number has gone from 2.63 GW in 2014 to 49.3 GW in 2021. Hell, the number went up by 12 GW from 2021 to November 2022!

India’s solar power generation has seen a 34% year-on-year growth, reaching 47.64 billion units. At this rate, the Government’s 2030 goal of achieving 450 GW of installed renewable energy capacity and deriving 62.2% of it from solar power seems like a real number and not another empty promise. Things are really looking up…

Just like the solar panels responsible for this “sunny picture”.

Even Motabhai wants a piece of this pie! Reliance New Energy Solar Ltd. (RNESL) has acquired two solar-based companies, REC Solar Holdings AS (Norway) and Sterling & Wilson Solar (India), for $1 billion. Reliance aims to achieve 100 GW of solar energy with these acquisitions.

You might be on Insider, but this is no secret information. All these numbers were sourced from readily available public information from the IBEF website. A retail investor cannot help but be lured into being “bullish” about the renewable energy sector.

Solar energy is a crowd favourite because it has been hardwired to the masses as the face of renewable or green energy. So when a penny stock with a 3570% absolute return in two years in the sector shows up, everyone’s “multi-bagger boner” pops up.

So, let us meet this stock and its company, shall we?

Urja Global Company Details

Urja Global is a renewable energy company that has garnered the “penny stock” title by falling down to abysmally low values (well, we are talking about India, so "Paise" more than pennies, but you get the point). At its lowest point, the company’s shares sold for a measly ₹0.86.

Here’s a little look at the company’s numbers to get you a little acquainted:

It was from a similarly low value of ₹0.91 in March to April 2020 that it experienced its 25% CAGR growth peaking at ₹33.40 by January 2022. But this spike is not the one that we wish to bring to your attention.

The spike that should garner your attention is the one that took place on July 2019. A result of the company toying with the public’s emotions.

Toying with emotions, how? Look at the company’s shareholding pattern first.

When a company has a promoter holding of a measly 30%, sure, the obvious point of discussion is “skin in the game”. Ever had an original thought?

The problem is not the low promoter holding but the major public holding. This means that most of the time, the company’s stock price moves because of public emotion. The same emotions that are mentioned as “corporate toys” above.

Let us understand how the people’s (and probably your) feelings got played…

What is Zacobite?

Remember Bunty and Babli? Remember all the fictitious sales they made? But see, the thing is, the objects of their sales at least existed. The ownership was the iffy bit.

But Urja Global took the whole thing a step too far and tried to sell a chemical called Zacobite to one Nippon Shinyaku from Japan. The sale was meant to help Urja Global create a global presence.

To the same effect, Urja had reportedly supplied five packs of Zacobite to Nippon Shinyaku for an invoice amount of $3,000 on 9th May 2019 as samples. Urja Global was acting as a mediator in this deal, supplying Zacobite to Nippon Shinyaku through another company named Salvamtech Ltd.

This is the information that could be derived from reports made by Urja Global to BSE. Care for a bite of good old reality?

Well, the first problem was the line of business that Urja Global was trying to get into. See, Nippon Shinyaku is a pharmaceutical company, and Zacobite was being sourced to help the Japanese pharma corp achieve operational efficiency.

There would be some semblance of reasoning in the sale if Urja itself produced Zacobite, but that was not the case either. As mentioned earlier, Urja acted as a middleman between Nippon Shinyaku and Salvamtech Ltd. and also earned a 10% commission on the $65.5 million transaction.

What was even more confusing was the fact that both Salvamtech and Nippon Shinyaku could transact the deal on their own without any participation from Urja. The deal defied any sign of prudence.

But the facts just keep getting more convoluted as, according to an article by Moneylife, the payment that Urja was supposed to make to Salvamtech to acquire the Zacobite was made to Babu Entreprises, a completely foreign party to the transaction.

Remember the reference to the movie Bunty Aur Babli made in this article earlier? Well, I am going to make a callback to that reference and bring this whole mess of a transaction to a close. The biggest zinger in this whole story is that Zacobite is neither a chemical on the periodic table nor a mixture of the chemicals that actually exist there.

Yup, Urja tried to sell reported selling a non-existent chemical to a business in an unrelated industry.

An email to Nippon Shinyaku by an individual interested in the proceedings revealed that there was no such deal going underway. This individual set off a chain of events that led to the exposure of this hollow exchange to the public through disclosures that Urja had to make to SEBI and more authoritarian bodies.

Zacobite Side Effects

Now, having read what the company did might allow most, if not all readers to form an opinion of Urja Global. However, when the information was newly presented to the public around July 2019, the stock saw a 4x tick in trading volume! From 24,66,000 trades in July 15, the volume skyrocketed to 93,41,000 trades in July 16, 2019.

This phenomenon just goes to show how easily a company’s stock becomes a plaything for traders. The poor promoter holding is one thing, but the management on board along with the compliance personnel are equally responsible for such reckless treatment of the public wealth.

Another aspect to consider is Urja Global’s market capitalisation. Standing at a miniscule ₹520 crore, it becomes obvious how a few individuals with some deep pockets can easily sway the “responsible employees” mentioned above to play to their whims and turn a company’s stock to a bubble of sorts.

What’s worse is when the retail public blindly engages in these trades with a “get rich quick” attitude. Sure, the element of human greed can never truly be satiated, but a little discretion goes a long way.

This entire rant was brought to you by Insider all because a product competitor for one of Finology’s products features Urja Global on its list. Having blind bought myself without proper research before, I cannot whine enough to not just depend on listicles and conduct proper research, or engage the help of a financial advisor before investing.

Also Read:

• Top Green Energy Stocks in India
• Adani Green Energy's Solar Order