Indowind Plans IPO At Premium Of Rs 20 A Share

Chennai, Sept 18: | Updated: Sep 19 2003, 05:30am hrs
Chennai-based Indowind Energy Ltd, the wind farm development arm of the Rs 80-crore Subuthi Group, plans to enter the capital market with an initial public offer of 2.51 lakh shares for Rs 10 at a premium of Rs 20. Indowind will be the first company from renewable energy segment to tap the market with a public issue. The company will use the proceeds from the IPO to fund its expansion plans, R&D and market development.

We have submitted the prospectus with Securities and Exchange Board of India (Sebi) already. We expect the issue to hit the market in November-December, 2003, company chairman Mr KV Balakrishanan told FE. Justifying the premium, he said, The book value of the eight year-old Indowind is Rs 42. Earning per share has been consistently at Rs 2.5 which is equal to, if not better than, any power company in the country.

Based on the provisional results, the networth of the company as on June 30, 2003 was Rs 48.12 crore, turnover Rs 7.55 crore and profit after tax Rs 2.44 crore, he added.

Even after the public issue, the promoters would hold 75 per cent of the equity. The pre-issue equity base of the company is Rs 7.53 crore, he said.

The market for renewable energy is going to be immense - thanks to Kyoto Protocol and the provisions of the new Electricity Act. The Kyoto Protocol and its emphasis on emission reduction offers both domestic and international market for green power.

In India, the estimated generation and consumption of electricity by 2012 is 2.1 lakh mw. When the global trend of consumption of 10 per cent power from renewable energy becomes mandatory in India, there will be big demand for power from wind and other renewable sources, he said. The wind power potential in India is estimated to be 60,000 mw. The current installed capacity is only 1870 mw.

Besides the domestic market potential, Certified Emission Reduction Certificates (CER) carved out of the generation and consumption of green power, would be a tradebale commercial paper which can fetch millions of euros and dollars, he added. With the present $4 per CER, the potential estimated is about $2,266 for every gigawatt hour of green power fed into the grid. We are looking at this futuristic market and we are sure to be the front runners in this sector, Mr Balakrishnan said.

Since its inception in 1995 , the company had a growth rate of 264 per cent. The industry average was only 22 per cent, he added. It also has a plant load factor (PLF) of 21.485 per cent compared to industry average of 15 per cent and Tamil Nadus 14 per cent during 2002-03.