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You are here : IndiaNotes >> Research & Analysis >> Companies >> Inox Wind Ltd. >> Research

Winds of Change: Inox Wind & Suzlon Energy

Namrata Shah | 04 May, 2016  | Follow Author | Add to my Favourites 
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In Feb 2016, I have been on Road trip from Ahmedabad to Kutch to cherish Rann Utsav and explore white desert.  While driving on highway, I noticed gigantic and elongated trailer truck carrying blades of windmill. Within next few minutes, I saw acres of land area covered with windmill. The wind mill seems to have been arranged equidistant from one another with small electricity transformer connect to each wind mill.

After, viewing this amazing site of windmills and grids, I decided to study 2 companies – Inox Wind and Suzlon Energy, in renewable energy sector from investment point of view.

Inox Wind is part of Inox group. The group has legacy of more than 80 years. Over the years, Inox group has diversified its business into industrial gases, engineering plastics, refrigerants, chemicals, cryogenic engineering, renewable energy and entertainment sectors. Inox Wind was incorporated in 2009.

Suzlon Energy has been exploring new techniques of generating electricity from renewable sources since 1995. The Company is headed by Tulsi Tanti.

Both the companies are providing integrated wind energy solutions. In FY15, Suzlon Energy ventured into EPC of solar projects.

Revenue Growth

Inox wind undertakes contract for wind mill installation on turnkey basis It earns revenue on EPC component and by supplying the products as per contract terms.

It also earns revenue from operation & maintenance (O&M) business. O&M contracts comprises of Wind Power Plant Infrastructure upkeep & maintenance. Such contracts are entered into for each windmill installed. These contracts are for long term and revenue is earned in form of annuity. So, with increase in windmill installation, O&M revenue portion of Inox would increase.

Over past 4 years, revenue has shown quantum growth leap. Extrapolating revenue for FY16, it is estimated that Inox would show yoy revenue growth of approx 30% in FY16.



Suzlon Energy earns revenue through sale of Wind Turbine Generator (WTGs) and wind power systems. It generates service income from installation, operation and maintenance revenue and through project execution.

Suzlon Energy experience negative revenue growth in FY13 on account of working capital constraints.

Operating Profit

Inox Wind has consistently registered positive EBITDA during FY13 – 9MFY16. EBITDA has oscillated during this period. However, it was able to register average EBITDA of 15.1%. 

Suzlon estimates to breakeven at EBITDA level at 450 MW of sales. For 9MFY16, with sales of 688 MW Suzlon posted positive EBITDA.

Debt / Equity

Debt includes Long term debt, Short term debt and current portion of long term debt

Inox Wind has low debt to equity ratio and the ratio has further fallen over period of time. This highlights capital management efficiency of the company.

Since past 3 years, Suzlon Energy has been struggling with its high debt to equity ratio.

Consolidated debt is considered for above ratio. Debt includes Long term debt and Short term debt

Not only Suzlon Energy has to repay its mammoth outstanding debt, it also has to manage negative shareholders fund. Shareholder’s fund turns negative when accumulated losses exceed profits transferred to reserves over life of the company.

It has restructured its debt and issued Foreign Currency Convertible Bonds (FCCBs) to ease its debt burden over period of next 5 years. Last month, it repaid 5% Apr 2016 FCCB series in cash along with applicable 8.7% redemption premium. These bonds were paid in cash as stock price traded on exchange was much lower than pre-determined conversion price of Rs. 15.46 per share (with a fixed rate of exchange on conversion of Rs 60.225 to U.S.$1.00).

Still, the Company has debt of Rs. 9,800 crores to be payable.  

Comparing, Inox Wind and Suzlon Energy for its debt profile, Inox Wind is comparative debt free. Also, Inox Wind enjoys strong balance sheet and future business growth would be available to its equity shareholders.

Analyzing Business Profile

Production Capacity: Inox Wind undertakes manufacture of 3 major components of windmill -  Nacelles and Hubs, Rotor blade sets and Towers. Post commission of new manufacturing line, the annual production capacity will increase to 1.6 GW.

Blade plant at integrated facility of 400MW has commenced production in Nov 2015. As of Feb 2016, trial production has commenced for tower plant.

Suzlon Energy has installed capacity base of 3,600 MW per annum for manufacturing wind turbine generator. Currently, it is not planning to incur any capital expenditure. Suzlon follows Make-to-Order model for manufacturing Wind Turbine generator. It starts manufacturing after receipt of order. As a result, it does not have to face inventory issue, but has large unutilized production capacity.

Unutilized production base indicates that Suzlon would be in better position to take advantage of growing industry demand for WTG. 

Product Comparison

Recently, Inox Wind commercialized the 100 rotor dia turbine and launched 113-meter rotor turbine with a hub height of 100 meters and 120 meters. These new products are expected to be 20% - 25% more efficient with higher operational uptime.

Suzlon Energy
has wide spectrum of products to offer. Its product portfolio ranges from 600 kW to 2.1 MW wind turbines. Its newly launched product S97 120 meter and S-111 has larger rotors to harness 20% higher wind energy (compare to its S9X product) from low wind sites. Suzlon has tested prototype product S97_120 meter in Gujarat and result indicates 35% higher PLF over the 12-months period.

Analyzing, products of both the companies, it can be said that Inox Wind and Suzlon Energy have launched new products in same category with similar wind harnessing capability. Both the companies are introducing new product suite to harness higher wind energy and thereby deliver higher ROI to customers across the geographies

Below is comparison of products of Inox, Suzlon & Gamesa from Motilal Oswal report on Inox Wind dated Jan 5, 2016.

Product Technology:

Inox Wind has secured license and know-how for manufacturing from its technology partner AMSC. This will enable Inox Wind to reduce its dependence on AMSC and also improve efficiency and lower cost of generation.

Suzlon Energy has in-house technology team led from its R&D Headquarters in Hamburg, Germany. It has strong R&D focus on reliability, ease of operation and loads reduction which will enable weight and cost reductions of wind turbines. There is a strong focus on increasing the energy yield of wind turbines at a given rating by improving aerodynamics and applying larger rotors.

Suzlon has ventured into EPC of solar projects during FY15. The energy generation cycle for Solar and Wind are complementary, but the required project execution capabilities are similar. The integration of Wind and Solar projects would lead to higher grid utilizations and thereby increase the Plant Load Factor (PLF). Higher PLF would in turn led to increase in profitability.

Land Bank:

Inox Wind has land banks in Gujarat, Rajasthan and Madhya Pradesh. It is in process of acquiring additional land in Andhra Pradesh and other states of South India. Currently, it has sufficient land bank to install about 4.5 GW of wind power projects

Suzlon Energy has land bank in 8 states, viz Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Tamil Nadu, Karnataka and Kerala.

Order Book:

Inox Wind obtains turnkey orders for supply and erection of WTGs and include carrying out wind studies, energy assessment, land acquisition, infrastructure development, erection and commissioning of the projects.

80% of Inox’s order book are firm contracts and about 15% to 20% are in form of Letter of Intent (LOIs). Order book will be executed with 12 – 15 months.

Suzlon Energy– order book

Suzlon Energy follows 3-stage method to build its order book – Framework agreement, negotiations and confirmed order.

- Framework Agreement: Framework agreements are a binding term sheet agreement between Suzlon and counterparty Independent Power Producer (IPP). It highlighting the units of WTG to be supplied, installed & commissioned along with other responsibility. Such orders are not part of Suzlon order book and are dealt separately.

- Negotiations completed but advance not received:  The orders for which Suzlon has closed the negotiations with customers but have not received sufficient advance money are also not part of order book value. Any letter of Intent (LOI) or Memorandum of understanding (MOU) signed with customer are not included in order backlog.

- Orders confirmed and advance received: If orders are confirmed and advance is received to the extent of 25% of total order value are disclosed in order book. Once the order forms part of its order book, it is executed within period of next 12 months.


Government Policy

Government of India has set an ambitious target to generate 175 GW of renewable energy by 2022 and 250 GW by 2030. Further breakup of its 2022 target is 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power.

Policy incentive introduced by government to boost renewable energy sector in India are shown below

Return to Shareholders

Inox Wind was listed in Apr 2015 and Suzlon Energy has received financial support from Dilip Sanghavi Associate (DSA) in Feb 2015. However, the share price of both the companies has fallen over 30% in past 1 year.

Source:Google Finance


As of May 3, 2016 Suzlon Energy is trading at Rs. 14.95 per share which is below the DSA investment value of Rs. 18 per share. Inox Wind is trading at Rs. 277.90 per share on May 3, 2016, which is also below IPO issue price of Rs. 325 per share (Rs. 310 for retail investor).

Inox wind is growing and expanding its operational capability. Suzlon Energy is reviving after hitting adverse business scenarios in past few years.


With respect to product profile, both the companies are competing with each other. Suzlon Energy is superior as it has its own in-house R&D capabilities. On the other hand, Inox Wind is currently dependent on its technology partner AMSC for its technical knowhow.

Inox Wind has strong balance sheet and strong promoter backing. As a result, it is not dependent on external institution for funding. Also, it has strong promoter backup. Suzlon Energy has reduced its debt burden considerably over past year; however, it still has substantial debt to be paid.

Both the companies has executed projects pan India and have demonstrated strong execution capability. With strong order book in hand for both Inox Wind and Suzlon Energy, we expect good growth prospects for both these companies.


Source: Annual Report FY13 to FY15, Quarterly Conference Call transcripts, Quarterly Investor presentation and Companies Website

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About Namrata Shah

Namrata Shah is a Chartered Accountant and an independent finance blogger. She loves analyzing companies financials, business models, corporate governance and other aspects of the companies. She has rich experience in research, valuation and audit, assurance & advisory function in reputed organisations. She blogs at .


For more information please write in to [email protected]

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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