INOX Wind

Pls have a look at the ambit report on inox wind . highlights several issues 20150617 - Inox Wind - Visit Note - Ambit.pdf (431.0 KB)

  1. poor cash cycle
  2. no provision for warranty claims and ZERO R & D show exalted EBITDA
  3. AMSC, its technology partner itself is under financial duress - from the checks I have done, AMSC has a really poor reputation for its technology and its earlier technology partner ghodawat energy ran into problems with installations. None of inox’s wind installations are more than 5 years old. Its technology is not a patch on suzlon or gamesa - a fact I independently veritified with a retired wind mill veteran.
  4. inox brand itsself is not owned by the company - which is ridiculous.
  5. 50-60% of its installations so far have been for its own group entities - for earning carbon credits and hence true blue third party customers are of less than 3-4 year vintage.
  6. they have zero installations in TN/AP - which have the highest power of wind power in India and are the toughest markets to compete in.
  7. inox’s land banks are limited to central and western india and this is expected to be a bottleneck going forward.
  8. unlike suzlon, inox’s technology agreement prevents it from exporting wind turbins which is a big road block - hence, they have the smallest capacity of all the wind mill guys

net, net it’s a business that just had a good time imho, when suzlon was struggling and the large majors did not focus on india given the withdrawal of subsidies and issues around land acquisition in india - while FY 16 looks promising, market checks indicate that suzlon is rapidly booking new orders and visibility beyond FY 16 seems hazy.

If orders slow, cash flow issues will come up soon enough and negative OCF’s which have been ignored by the market will start exerting pressure on the balance sheet.

4 Likes