Inox Wind IPO: Investment for long term plan may be considered

SMC | March 18, 2015, midnight

Business Profile


Incorporated in April 2009; Inox Wind Limited is leading wind power solutions provider in India. Inox manufactures wind turbine generators. The Company also offers services including wind resitsce assessment, site acquisition, infrastructure development, erection and commissioning, and also long term operations and maintenance of wind power projects. The Company manufactures the components of wind turbine generators in-house with a view to ensure high quality, advanced technology and reliability and also maintaining cost competitiveness.


Strategy


- Expanding and improving its existing manufacturing facilities: The Company has in-house facilities dedicated to manufacturing the major components of a WTG, including nacelles, hubs, rotor blade sets and towers. The Company has entered into license agreements with WINDnovation to allow it to manufacture rotor blade sets with rotor diameters of 100 meters and 113 meters. The company intends to expand the capacity of the tower manufacturing facility at its Rohika Unit from the current capacity of 150 towers per annum to 300 towers per annum.


- Constructing a new integrated manufacturing facility at Barwani, Madhya Pradesh: The Company is in the process of constructing a new integrated manufacturing unit at Barwani, Madhya Pradesh to manufacture nacelles and hubs, rotor blade sets and towers.


- Increasing its inventory of Project Sites: As part of its strategy to provide turnkey solutions for wind farm projects, the company intends to continue to pursue further Wind Site acquisition and development opportunities to replenish and expand its inventory of Wind Sites.


- Improving the cost-efficiency of generating power from wind energy: The Company aims to improve the cost-efficiency of power generation from wind energy by reducing the cost of generating electricity per kWh from its WTGs. The company also plans to achieve this goal by offering its customers more advanced WTGs with improved power curves.


- Continuing to consolidate its position in the Indian market and grow outside of India: the company intends to develop its customer relationships and enter into agreements with the large independent wind power producers to ensure a steady expansion of capacity installations.


Risks


- The Company has experienced negative cash flow for 9 month ending 31 Dec 2014 and the years ending March 31, 2014 and 2013.


- The Company's operation is dependent on supply of raw materials and components on timely basis.


- The Company depends on the continuing operation of its manufacturing plants


- The company is dependent on a small number of customers and its business is dependent on its continuing relationships with its customers.


Outlook


The fundamentals of the company look good. Moreover, the government of India has planned nearly 60,000 megawatt of wind energy by 2022. Since the new government is in the centre, it has been sending strong signal for investments in renewable energy. Meanwhile, the company has expanded and is developing projects in Gujarat, Rajasthan, Madhya Pradesh, Maharashtra and Andhra Pradesh. Furthermore, the company belongs to well known investor friendly group and investment for long term plan may be considered.

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