Indowind Energy Ltd.

by Manshu on May 1, 2007

in IPO/NFO

Indowind Energy Limited is entering Indian primary market with a Public issue of 1,25,00,000 equity shares of Rs.10 each. The issue is a 100% Book Built. Below are the salient features of this issue:
 

Business of the Company

Indowind started developing wind farms in a small way by installing a 225 KW Wind Electric Generator, in September 1995. Since then, the Company has been expanding wind farm capacity every year to reach the present capacity of 16.825MW and 17.915 MW for clients & group companies whose O&M is with the Company. The Company is currently in the process of implementing additional capacity of 9MW capacity in Karnataka.
The current scope of operations of Company includes:
A) Wind Power Generation
B) Operations & Maintenance of WEG’s
C) Turnkey operations for windmill projects

Promoters

The company is promoted by the entrepreneur Mr. K V Bala. Subuthi Finance Limited and Loyal Credit and Investments Limited are the other promoters of the company.
 
Financials

Indowind Energy Ltd. has shown consistent profits in last 5 years. For the FY ended June 30, 2006, the company clocked a turnover of Rs. 26 crores. The restated net profit for the same period was about Rs. 5.20 crores. For FY 2007, till September’2006, company had clocked a turnover of Rs.4.66 crores and a net profit of Rs.2.15 crores. From past 2 years, nearly 50% of sales come from Project Income. However, for the 3 months of FY 2007, no Project Income is shown in the financial results. For FY 2005 and FY 2004, the top line was Rs. 19.83 and Rs. 8.66 crores approximately. The net profit for FY 2005 was Rs. 4.14 crores and for FY 2004 was Rs. 3.08 crores.
 

Particulars of the Issue

Indowind Energy Ltd. IPO is a fresh 100% Book Building issue of 1,25,00,000 Equity Shares of face value of Rs. 10/- each constituting 25.53% of the fully diluted post issue paid up capital of the Company. At least 42,84,000 Equity Shares of face value of Rs.10/- each constituting at least 35% of the Net Issue is reserved for the retail investors.
 

Basis for Issue price

Indowind Energy Ltd. claims that it’s a consistently profit making company. It generates power without using any raw materials. Company has become the first Wind Energy company from India to get the Carbon Credits (Certified Emission Reductions) issued by UNFCCC for its recently commissioned 12.3 MW projects in Tamilnadu under the Clean Development Mechanism of Kyoto Protocol.
 
Objects of the Issue

The Setting up 9 MW Wind Farm Project in at Chitradurga, Karnataka is one of the main objects of issue. Then purchase of Hydraulic cranes and acquisition of second hand Wind Energy Generators (WEG) from Banks are other key objects. Company intends to foreclose lease with ICICI Bank and UTI Bank with issue proceeds.

Risks

Following are the key risks which can impact company’s performance:
a.       Project has not been appraised by any financial institution.
b.       There is risk related to purchase of second hand windmill machinery and no definitive agreement to do so have been entered so far by the company.
c.       Company has not yet signed a Power Purchase Agreement with Karnataka State government.
d.       Company is fighting various tax related cases.
e.       Company enjoys various government incentives like Section 80-IA. If this is withdrawn, it can adversely impact the company performance.

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