News Update

Sector seeing investments, eyeing 1500MW orders: Inox Wind

Devansh Jain, Director, Inox Wind speaks about the wind energy business in India. The company expects incremental orders worth 1,000-1,500 MW in the coming days. As of March 2015, it had an order book of 1400 MW.

With the government reintroducing generation-based incentives, environment for renewable energy sector has improved. Devansh Jain, Director, Inox Wind speaks about the wind energy business in India which is seeing investments from government companies and independent power producers. Jain says Inox Winds expect incremental orders worth 1,000-1,500 MW in the coming days. As of March 2015, the company’s order book stood at 1,400 MW.

Below is the transcript of Devansh Jain’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Latha: One hears about multiple tailwinds but is that the business environment has gotten better for wind energy companies like yours? If yes, in what way?

A: The environment has improved. I think this government has put a huge thrust on the renewable sector. Having said that there are couple of things that the government has done to boost prospects for companies like us. We have seen an age old policy initiative which is accelerated depreciation benefit was withdrawn after being around for about 15 years come back; that was a sizeable and historically the entire wind sector depended on the market. That has been re-introduced. The second piece that has happened is this entire vertical where independent power producer (IPPs) and utilities come in and invest big time in the sector that has got a huge fillip with the government being so pro-renewable energy. We see that by way of the generation based incentive being reintroduced. We have seen that multiple states have now come out with multi-year tariffs policies. We have seen tariffs improves to a certain extent which is increasing or making certain investments in renewable now fairly viable. The other piece that we have seen within the sectors in the previous Budget, we have seen all profit making entities had to spend about two percent of their profits towards Corporate Social Responsibility (CSR). What this government did was they made investments in renewable energy count towards that. So we are seeing a lot of investments coming into the sector from the public sector units as well. The fact that the government is pushing these guys and any case to invest in renewables and the fact that they have this CSR obligation is doubling up to lead to these guys coming in. We have seen these three sectors opening up or three vertical the accelerated depreciation guys which are the retail guys the smaller corporate come back. IPPs and utilities have come in in a major way and the PSUs are coming in a slightly significant way. Just one more thing I would like to add what is also happened is we have now seen loans being made available, so historically may be 2-3 years ago most of the banks had reached their quotas where they could no longer lend to the power sector. Althought the new government has cleaned up other woes in the power sector, I think there are very limited new investments taking place on that front. So we are actually seeing likes of Power Finance Corporation Limited (PFC), Rural Electrification Corporation (REC) so on and so forth really come in and provide large scale funding and multiyear funding to renewable energy projects. All these things put together is given a huge fillip to the sector.

Sonia: As of the month of June what is the order book that Inox Wind is sitting on and what is the realistic trajectory of order inflows that one can expect over the next 2-3 years?

A: I wouldn’t be able to share what our order books as of June is. We share that at the end of every quarter. In our analyst call in May what we had said; our order book was at about 1,400 Megawatts. We will be announcing our Q1 results shortly. I will be able to talk more at that point in time but we should be virtually around somewhere around that number. With respect to order inflows over the next two to three years, you see this is not a sector where you can build up order books for the next 3-4 years simply because this is something which depends on policies. Policies typically, historically had been for 6 months or one year and now we have seen multiple states come out with let us say two year policies and three year policies. So, to that extent we will probably see order books which would be for 1-2 year at most. I believe Inox Wind has the largest order book in the sector at this point in time. However, we would expect to have an inflow of about a 1,000-1,500 Megawatts year-on-year (YoY) which we would be implementing over the course of that year or additional next quarter or so.