Financial Snapshot

Quarterly performance of listed renewable energy companies

The Indian renewable energy sector has witnessed interesting developments in the past few months. In the solar segment, there has been a free fall in tariffs, with a new low of Rs 2.44 per kWh being achieved in the auction for 500 MW of capacity at the Bhadla Solar Park in Rajasthan. The fall in tariffs is being driven by hypercompetition among developers and a steep fall in global equipment prices. While these tariffs are good for end-consumers and discoms, developers are concerned about decreasing revenues and the long-term financial viability of solar projects at such tariffs.

Meanwhile, in the wind power industry, the transition from the feed-in tariff (FiT) regime to a competitive bidding regime has changed sector dynamics. The prices discovered through the reverse bidding mechanism are significantly lower than the tariffs under the FiT regime. Lower tariffs are bound to put wind power projects under stress and consequently, lead to declining orders for wind turbine generators. Moreover, while the accelerated depreciation benefit for wind energy projects has been slashed from 80 per cent to 40 per cent, effective April 2017, generation-based incentives have been completely removed.

Meanwhile, in a key policy move, the government has decided to impose a 5 per cent goods and services tax on renewable energy equipment such as solar panels and wind turbines, at par with coal.

During the quarter ended March 2017, the listed renewable energy companies exhibited an overall positive trend in their financial performance, with some companies continuing to show a jump in profits and others managing to reduce their losses. However, in a major disappointment, Inox Wind reported a sharp decline in profits, portending a weak financial outlook for 2017-18.

Renewable Watch presents a snapshot of the financial performance of listed renewable energy companies in India for the quarter ended March 2017…

Indosolar Limited

Solar cell manufacturer Indosolar reported a net profit of Rs 324.08 million during the quarter ended March 2017 as against a net loss of Rs 297.76 million during the quarter ended March 2016. The improved performance was on the back of a 13.57 per cent increase in revenues, from Rs 1,014.75 million to Rs 1,152.49 million, and a decrease of 58.44 per cent in expenses, from Rs 1,312.5 million to Rs 828.41 million. The company’s sales expanded by 13.66 per cent from Rs 995 million to Rs 1,130 million.

Meanwhile, Indosolar reported a negative finance cost of Rs 80.2 million during the quarter ended March 2017 compared to a positive finance cost of Rs 272.79 million during the same quarter in 2016. The company’s current liabilities exceeded its current assets by Rs 13,283.88 million (with its long-term borrowings being considered as current liabilities, as its bank accounts were declared non-performing assets).

Owing to the strong growth of the domestic solar power segment, the company had an order book of 59 MW as of end-March 2017. Indosolar thus expects to achieve optimum capacity utilisation till July 2017.

Indowind Energy Limited

Indowind Energy reported a jump of 536.03 per cent in its net profit from Rs 1.36 million during the quarter ended March 2016 to Rs 8.65 million during the quarter ended March 2017. This was led by a 24.98 per cent increase in its revenue from Rs 22.18 million to Rs 27.72 million, and a decline of 18.17 per cent in expenses from Rs 35.6 million to Rs 29.13 million. Finance costs declined from Rs 33.1 million to Rs 15.93 million during the same period.

In March 2017, Indowind Energy announced the successful completion of repowering of 1.92 MW of wind farm capacity at Hanumsagar, Karnataka. The company also commenced upgradation of 3.025 MW of wind farm capacity at Tirunelveli, Tamil Nadu, which is expected to generate an additional yearly revenue of Rs 25 million.

Inox Wind Limited

Inox Wind’s profit plunged 36.59 per cent from Rs 2,011.2 million during the quarter ended March 2016 to Rs 1,275.4 million during the corresponding quarter in 2017. This was on account of a decline of 44.37 per cent in the company’s total income, from Rs 18,580.3 million to Rs 10,335.5 million. Meanwhile, its net expenditure fell by 46.5 per cent, from Rs 15,662.7 million to Rs 8,452.1 million.

Inox Wind’s earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at Rs 2,438.4 million in the quarter ended March 2017. Its EBITDA margin increased from 17 per cent during the quarter ended March 2016 to 22.5 per cent during the quarter ended March 2017.

The company won the rights to set up 250 MW of wind projects at Rs 3.46 per kWh in the country’s first-ever wind auction in February 2017. It is optimistic about continuing its winning momentum in future auction rounds by the Solar Energy Corporation of India, given its low-cost structure.

Ujaas Energy

Ujaas Energy reported a decline of 21.88 per cent in its net profit from Rs 138.49 million during the quarter ended March 2016 to Rs 108.19 million during the quarter ended March 2017. This was on account of a decline of 3.04 per cent in its revenues, from Rs 1,669.85 million to Rs 1,619.21 million and an increase of 3.03 per cent in expenditure, from Rs 1,390.08 million to Rs 1,435.86 million. Meanwhile, the finance costs of the company declined from Rs 53.52 million to Rs 42.45 million during the same period.

Segment-wise, the company generated revenues of Rs 104.43 million from its solar power plant during the quarter ended March 2017, as compared to Rs 107.39 million during the corresponding quarter in 2016. It reported revenues of Rs 1,514.78 million from manufacturing and sale of solar power systems during the quarter ended March 2017 as against Rs 1,562.45 million during the quarter ended March 2016.

The company has received several new orders in the past few months. It recently received a letter of intent from MOIL (a manganese ore mining company headquartered in Nagpur) for the design, engineering, procurement, supply, construction, erection, and testing and commissioning of 5.5 MW of solar photovoltaic plants with tracking systems on a turnkey basis at mines in Madhya Pradesh. It also received orders for 2,500 kW of grid-connected solar rooftop capacity from the Rajasthan Renewable Energy Corporation and 1,768 kW of solar capacity from the West Bengal Power Development Corporation.

Orient Green Power Limited

Orient Green Power Limited (OGPL) narrowed its net loss from Rs 1,583.86 million during the quarter ended March 2016 to Rs 859.86 million during the quarter ended March 2017. This can be attributed to the 30.29 per cent increase in its revenues, from Rs 447.3 million to Rs 582.8 million. Meanwhile, the total expenses of the company increased marginally, from Rs 1,303.57 million to Rs 1,340.2 million.

OGPL is in the process of demerging its wind and biomass entities into two separate companies – OGPL (wind) and Bio-bijlee Green Power Limited (biomass). Subsequent to the demerger, the firm will have an operating wind capacity of 425 MW and an additional 43 MW under construction. In January 2017, OGPL had announced that it is in exclusive talks to merge its wind energy assets with IL&FS Wind Energy. IL&FS Wind has an operating capacity of 775 MW and is developing an additional 228 MW of capacity. The merger would create the largest public listed renewable energy firm in India with 1.2 GW of operating wind power capacity.

Suzlon Energy

Suzlon Energy pivoted to profits in the quarter ended March 2017 from losses in the same quarter in 2016, owing to a record number of wind turbine installations. It reported a consolidated net profit of Rs 5,789.9 million for the quarter ended March 2017, as compared to a consolidated net loss of Rs 3,338.7 million for the corresponding period in 2016. This was on account of a significant jump of around 54 per cent in its total income from operations, which increased from Rs 32,460.4 million to Rs 49,993.3 million. Meanwhile, the total expenses of the company rose by 35.89 per cent, from Rs 29,994.5 million to Rs 40,759.6 million.

Suzlon installed about 1,779 MW of wind energy capacity in 2016-17, taking its cumulative installations to over 11 GW in India and over 17 GW globally. The company also created about 1,800 MW of blade manufacturing capacity in 2016-17. Its share in the Indian wind turbine market stood at about 32 per cent and its order book stood at 1,562 MW, including 231 MW from solar projects, as of end-March 2017.

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