Hope to see margins at 20% in FY17: Inox Wind

Inox Wind has bagged a 100 MW wind power project from Ostro Energy. On the back of this, the company expects its margins to grow to 20 percent in the next fiscal year, says Devansh Jain, wholetime Director, Inox Wind.Speaking to CNBC-TV18, Jain says this project will make its current orderbook grow to 1250 MW and the company will finish it by March. With one of the largest orderbook in the wind energy sector, the company’s market share is close to 30 percent.Below is the transcript of Devansh Jain’s interview with Nigel D’souzan and Reema Tendulkar on CNBC-TV18.Reema: Could you give us the timeline of execution of this particular order as well as with this win, what would the order book stand at?A: We are expected to do this project by March. It is part of one of the larger wind-farm projects which we are developing in Madhya Pradesh which is a 200 megawatt project and the timeline for this project would be about six months.Reema: And the order book?A: With this our order book would exceed 1,250 megawatts at this point in time.Nigel: That is including this 200 megawatts?A: That is right. With that, net of all the capacity additions which keeps taking place on an ongoing basis. So, net of this incremental order, our order book at this point in time would be about 1,250 megawatts.Nigel: Could you give us some numbers then? What exactly is the potential revenue you could get from this particular order? What is the margins that you are expected to get on this order?A: Again, it will be hard for me to share quantum of order value, but broadly, turbine prices for a turnkey order about Rs 6-6.5 crore a megawatt. So, this order would be around that range. Nigel: What about potential margins on an order like this? You are saying Rs 6-6.5 crore is normally per megawatt, so what are the potential margins, what have they been and what could they be on this particular order?A: I can speak for Inox Wind. Again, for the past three or four years, we have been at margins of about 15-16 percent. What I have maintained, our aim is to take our margins closer to about 20 percent in the next financial year. So, we will be between 15-20 percent margins at this point in time including this order.Reema: So, looking to improve margins to 20 percent by next year. It has been two months into this quarter. What has been the total order inflows that you have seen? I believe in Q1, you had order inflows of 162 megawatts. What has it been so far in Q2?A: I do not have the exact numbers but, I think inflows in this quarter, net of what we are executing would, inflows would be close to about 300 odd megawatts this quarter. But again, from this we will have to subtract what we supply and commission over this quarter. Those are numbers which I will probably be able to disclose only at the end of September 30. Reema: And what is the pipeline looking like? Are you close to bagging any more orders?A: I think we are seeing a very strong momentum. At this point in time, I believe Inox Wind has the largest order book in this sector and we should be making a lot more announcements on the order book side in the coming couple of weeks. I think we are seeing a very strong traction on booking additional orders. We will be announcing that very shortly.Nigel: Just shifting away from this particular order. I am just seeing some news that came overnight. I believe that American Superconductor Corporation (AMSC), they said last night in a filing to New York Stock Exchange (NYSE) that they have received an order for wind turbine electrical controls worth around USD 40 million. Could you throw some light on that?A: AMSC is one of the component suppliers to us. Of course it is our technology partner as well. But, the technology was well absorbed about five years ago. So, there is no ongoing technology relationship as such. But these guys continue supplying the electrical control systems to us. So, it is just a regular order. Now, USD 40 million is a large order for a nuclear system, but that just shows the kind of volumes, or a broad indication of the volumes we expect to do in this financial year.Reema: You said your order book is perhaps one of the largest. Has your market share improved from the 12 percent when we had last spoken?A: At this point in time, our market share is close to 30 percent. I think the 12 percent is more an anomaly because to the extent that you are doing equipment supplies and where you are not responsible for the whole turnkey piece or the commissioning of the turbine, I think our people generally calculate market share, Ministry of New and Renewable Energy (MNRE) releases on an annual basis, number of turbines commission. And to the extent that equipment supply is not a part of that, our markets are kind of get diluted. But I think we would have been close to about 22 percent market share which has now improved to upwards of 30 percent at this point of time.