Confident of crossing annual profit of Rs 12cr: Indowind

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KV Bala, Chairman, Indowind Energy in an interview with CNBC-TV18 said that the company is confident of crossing the yearly profit figure of Rs 12 crore. If the company is successful in implementing new projects on time then profits could jump by another 30-40%.

From this year onwards the company is taking into account April - March as the regular year.

Also Read: Indowind Energy to raise $25-50 mn for 100 mw project

Below is the verbatim transcript of his interview with Latha Venkatesh and Ekta Batra of CNBC-TV18. Also watch the accompanying video.

Q: What went wrong in the quarter that just went by that is the March quarter, we don't still have your June numbers and I believe that is your full year numbers. March quarter saw your numbers on a year on year basis down, net sales at Rs 5.7 crore versus Rs 12 crore likewise no profit reported as well just about Rs 0.3 crore. Can you take us through the last quarter?

A: Last quarter March was a very lean period for Independent Power Producers (IPPs) especially for wind, we don't have wind power during that period. But in previous year we had project going on but in the last one-two year there has been a continuous increase in interest rate and they were changing the viability of the project.

So we were waiting and we were concentrating on increasing our power revenues by increasing the power price. We have more concentration on that and our carbon credit income also didn't come into the company though we are eligible on accrual basis.

We wanted to book it on a conservative basis what is realised only in this year. So we didn't book that carbon income which is eligible and also some contingent income which could possibly come in the next quarters.

Q: What are your eligible by way carbon credit income going by current carbon credit prices?

A: Our Tamil Nadu project, the 12.3MW project is already registered for which we have received income two years back. Thereafter with global recession the verification process started taking long time and then we could not get the money in though we were eligible for the past period income also. We hope to get that income in the coming year and the verification process is now getting over by July.

Similarly our Karnataka project of 18MW also got delayed for registration for more than two years purely because of the global environment. But luckily last week got the registration completed, now it is waiting for the crediting period sanction. So we hope that all this will give around Rs 3-3.5 crore and also we will get the past year income worth about Rs 5-6 crore in the coming year.

Q: Can you give us an update on your fund raising. We understand you are raising funds via ADRs, GDRs also preferential issue of shares how much would you be looking to raise and what will it be used for?

A: We already did a GDR issue, we raised about Rs 80 crore, we are trying to setup 28MW project which can go during the current year. We have also got some banks sanction for import of capital goods etc at. So we are looking at Rs 200 crore during the current year we will be investing for which the funds are fully tied up.

But an opportunity has also come in our way wherein we can expand our project for another 70MW. For which some suppliers are very keen on doing the project in two years time. So we are trying to get statutory approvals for further capital raising in place.

Though we are not going to do it immediately but we are waiting for the approvals to be in place. Our FCCBs which is around USD 30 million, is due for redemption next year so if they convert then we need to have a accomodate for the capital increase. So we are trying to keep a room for them.

Q: What is the conversion price?

A: The conversion price per se is we took an approval between Rs 48 and Rs 65.

Q: But you are nowhere near that so do you have the money to redeem the bonds?

A: That is why we are making alternative arrangements in fact our existing projects are already earning cash so we will start earmarking them. In the worse situation we may borrow another 10-15 million ECB funds when the due date comes.

Q: When is the due date you said?

A: Next year December.

Q: How much is the amount you may have to payback if they are not converted?

A: In all it is around USD 30 million plus some coupon. We are working towards that options have been discussed with the bond holders and to even go for further reduction in the price in case if there is situation warrants. But we are now confident about the new projects which are coming up so there may not be a need. Even there is a surplus which can come up in our existing capacity, power generation in the next two seasons, they can take care of the liability.

Q: How much are you expecting by 2012 to be generating by way of megawatts. At the moment you are generating 30 mw, right?

A: Yes, we have around 50MW, our power income on a yearly basis is around Rs 30 crore net flowing to the company, after expense our power division alone should contribute around Rs 20 crore. So next two seasons, this current season and next season should give us around Rs 40 crore of money.

We have some projects where we still not borrowed or we can sell them. We have standby assets available in the balance sheet so we are not worried much on that account, we will be able to sail through.

Q: I am still little intrigued by the flow of your profit and your revenues; it was not just that the three month ended March 31 that your revenues fell year on year even for the 9 month ended March 31 your revenues have fallen to 45 crore from 53 crore in the year ago comparable 9 months. Your profit fell from 11 crore to about 4.5 crore for the nine month ended March 31. There is continuity in terms of a slowdown?

A: No, as I said there is carbon income which is around Rs 3-3.5 crore which we were entitled to book but then we didn't want to book it unless the registration is over. Now that has got delayed so this particular year we have missed around Rs 3.5 crore of carbon income and that has pulled down the profit.

But second is season nature; we were following a year ending of June till last year but this year we are trying to close it in March to bring them into uniform accounting. So our current year is a season; June and September so that will have adjustment impact.

Q: Give us a sense on what you could end this year with in terms of year on year growth in your topline?

A: From this year onwards we are looking at April to March as the regular year. We are confident we will be crossing that yearly profit of about Rs 12 crore. But with new project what we are implementing if we succeed in implementing them in time and maybe little ahead of the next season then our profits could jump by another 30-40%.