Inox Wind to double capacity depsite unpredictable policy situation for Indian wind business

Inox Wind Ltd., India’s fourth-largest wind turbine supplier, may spend 1.5 billion rupees ($27 million) to expand capacity at two plants in Gujarat state as it targets greater market share.

The company, whose customers include Oil India Ltd. (OINL) and Welspun Energy Ltd., may boost capacity to 800 megawatts from its rotor blade and tower factories in the western India state, from 500 megawatts this year, said Devansh Jain, director of Inox, based in Noida, near New Delhi.

“We’re waiting for some clarity on the policy front,” he said yesterday in a phone interview. Should the government reinstate a wind-farm subsidy as promised, that would stoke the additional demand necessary to justify an expansion, Jain said.

India, the world’s third-biggest market for wind turbines, installed 1,700 megawatts of wind capacity last year, 32 percent short of its target after the government withdrew a tax break and generation-based subsidy for wind farms, according to the Ministry of New and Renewable Energy. The government pledged to reinstate the subsidy in February though it has yet to do so.

Inox plans to nearly double installations to 500 megawatts in the financial year ending March 31 amid a shakeup that’s causing weaker turbine suppliers to halt production. The number of manufacturers that installed machines last year fell by 42 percent to 11 with the top five controlling 90 percent of the market, according to data from the Indian Wind Turbine Manufacturers’ Association.

Turbine prices in India are among the lowest in the world averaging between 57 million rupees to 60 million rupees per megawatt, Jain said. That’s unlikely to fall much lower as most turbine suppliers are losing money amid thin margins, he said.

Inox’s board is evaluating “alternatives for raising capital by any permissible modes,” according to a May 9 filing by Inox’s parent, Gujarat Fluorochemicals Ltd. (GFLC) Jain declined to elaborate.