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Wind Power Market – India May 2014
Executive Summary Market
Wind energy has emerged as the fastest growing renewable energy sector in the country With a cumulative installed capacity of over ‘m1’ GW as of FY 2013, wind power currently accounts for almost 70 % of the total installed capacity in the renewable energy sector This sector is expected to grow at a CAGR of x2% to reach ‘h2’ GW by FY 2019e In recent years the market slumped due to the withdrawal of the AD & GBI schemes by the Government
Drivers
Drivers & Challenges
Trends
Government
Challenges
– Huge Untapped Wind Power Potential – India Remains Energy Deficient – Global Drive towards Clean Energy – Volatile Oil Prices – Depleting Coal Reserves
– Withdrawal of Accelerated Depreciation Scheme – Issues of Grid Integration – Land Acquisition Problems
Potential of Off-Shore Capacity Vertical Integration Hybrid Generators
Major Investments in the Wind Sector
Major Government Bodies Policy and Regulatory Incentives State wise Comparison Of Feed-in-tariff Policy For Wind Power (Top Five States) Major Players
Competitive Landscape
Company 1
Company 2
Company 3
Company 4
Company 5
Company 6
WIND POWER MARKET IN INDIA 2014.PPT
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•Economic Indicators •Introduction •Market Overview •EXIM •Drivers & Challenges •Trends •Government Participation •State Specific Issues •Competitive Landscape •Strategic Recommendations •Appendix WIND POWER MARKET IN INDIA 2014.PPT
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Economic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn 15
13
d1 c1 b1
12
a1
14
c4 b4 a4
c3 b3 a3
d2 c2 b2 a2
11
Q1
Q2 2010-11
2011-12
Q3 2013-14
2012-13
Q4
Inflation Rate: Monthly % 2 1
p
r
s
q
0 -1
t
-2
Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
Oct 2013 - Nov 2013
WIND POWER MARKET IN INDIA 2014.PPT
Nov 2013 - Dec 2013 4
Renewable energy is gaining prominence within the power sector in India Renewable Energy Scenario
Energy Market Segmentation
• Principal sources of renewable energy are:
d%
c%
Segment 1 Segment 2 Segment 3 Segment 4
Segment A Segment B Segment C
b%
• Renewable energy capacity presently accounts for x% of the total installed power capacity in India • India plans to more than double its renewable energy capacity by 2017 • The Government of India plans to generate an additional ‘y’ GW of renewable energy in the 12th Plan Period, more than double the ‘z’ GW added during the 11th Five Year Plan • The Ministry of New and Renewable Energy (MNRE) plans to take the total renewable energy capacity to more than ‘v’ GW during 2012-17 • Wind energy accounts for 70% of the total renewable energy capacity in India currently
Segment D a% Total installed capacity of power is ‘m’ GW
Jan, 2013
Renewable Energy Market Segmentation
Segment 2
r%
Segment 3
q%
Segment 4 p%
Jan, 2013
WIND POWER MARKET IN INDIA 2014.PPT
Segment 1
s%
Total installed capacity of renewable energy is ‘n’ GW
5
Wind energy accounts for the largest share of India’s renewable energy capacity Market Overview (1/2) • Wind energy is one of the fastest growing renewable energy sectors in India and accounts for nearly p% of the installed grid-connected renewable capacity • Cumulative wind power capacity of India stands at ‘u’ GW as on Oct 31, 2013 • More than ‘t’% of the nation’s wind installations till date are concentrated in just five states in southern and western India – Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, and Gujarat • Growth slowed down in 2012-13, when the sector witnessed capacity expansion of only ‘y’ GW, way below the targeted ‘z’ GW for the year This was primarily due to the withdrawal of two key policy initiatives, Accelerated Depreciation (AD) and Generation Based Incentive scheme (GBI)
• However, with the GBI scheme being reinstated in Aug 2013, growth in the sector is likely to pick up again
Market Size: Historical (FY 2003 – FY 2013) GW 4
x1%
l1
3
2
k1 a1
1
b1
c1
f1
g1
h1
i1
j1
2006
2007
2008
2009
2010
d1
m1
0 Upto 2002
2003
2004
2005
WIND POWER MARKET IN INDIA 2014.PPT
2011
2012
2013
6
Wind power market is poised to grow with the revamp of the Generation Based Incentive scheme Market Overview (2/2) • Reinstating the GBI scheme will provide the sector the much needed boost for capacity addition in the latter half of the 12th Five Year Plan, for which a target of ‘q’ GW has been set • Launch of the INR ‘z’ bn Green Energy Corridors project, which involves the development of dedicated transmission infrastructure for renewable energy integration, is another positive development The Green Energy Corridors project will address the issues related to grid integration due to growth in installed capacity and infirm nature of the resource which the sector is currently facing
• Several states have also increased wind power tariffs by ‘m’% - ‘n’% to attract investments This has led to a shift in new wind power development from resource-rich states such as Tamil Nadu and Gujarat to low-wind density states such as Rajasthan. Madhya Pradesh and Maharashtra
• In future, the Renewable Purchase Obligations (RPOs) and the Renewable Energy Certificate (REC) mechanism will be the key growth drivers for the sector
Market Size: Forecasted (FY 2013 – FY 2014) GW 6
h2 x2%
4 2
a2
b2
2013
2014e
g2 f2
d2
c2
0
2015e
2016e
2017e
WIND POWER MARKET IN INDIA 2014.PPT
2018e
2019e
7
Exports have declined steadily over the past four accounting years Export of Wind Mills and Turbines (Value-Wise) INR mn 1,500
p 1,000
u%
500
q
r
s
2010-11
2011-12
2012-13
0
2009-10
Exports (Country-Wise: 2011-12)
Exports (Country-Wise: 2012-13) Country 1
c1% d1% b1% f1% g1% h1%
Country 2 Country 3
Country 4
Country 7
d2% g2% f2% c2% h2%
Country 8 Country 9
Country 10
b2%
Country 5 Country 6 a1%
Domestic consumption accounts for almost the entire production of the Indian wind energy sector
Others
WIND POWER MARKET IN INDIA 2014.PPT
Country 11 a2%
Country 12 Others
8
Drivers & Challenges – Summary
Drivers
Challenges
Huge Untapped Wind Power Potential
Withdrawal of Accelerated Depreciation Scheme
India Remains Energy Deficient
Issues of Grid Integration
Global Drive towards Clean Energy
Land Acquisition Problems
Volatile Oil Prices Depleting Coal Reserves
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Trends – Summary
Potential of Off-Shore Capacity
Vertical Integration
Key Trends
Major Investments in the Wind Sector
Hybrid Generators
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Government Participation – Summary
Major Government Bodies and Associations
Government Participation State-Wise Wind Power Tariff
Policy and Regulatory Incentives
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State Specific Issues – Top Five States (1/5) GUJARAT
Achievements and Targets
Tariff Control
Identification of Land
Purchase of Land
Power Evacuation
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Market Competition – Porter’s Five Forces Analysis Impact X
Threat of New Entrants
•x
Impact X
Bargaining Power of Suppliers
•x
Competitive Rivalry
Impact X
•x
Impact X
Bargaining Power of Buyers
•x
Threat of Substitutes
Impact X
•x
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Competitive Benchmarking (1/5) Public Trading Comparables Company 1
Company 2
Company 3
Market Capitalization (INR bn)
Share Price (INR)
EV/EBITDA (x)
EV/Revenue (x)
PE Ratio
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Competitive Benchmarking (2/5) Key Ratios of Top 4 Companies – Operational Basis (FY 2013) (1/3) Operating Margin
%
Net Margin
40
a4 b4
20 0 -20 -40
-a2
-a1
-b2 -a3
-b1 Company 1
Company 2
-b3
Company 3
Company 4
• Company 4 recorded operating margin of a4%, higher than that of Company 1, Company 2 and Company 3 which recorded operating margin of negative a1%, negative a2% and negative a3% respectively • Net margin for Company 4 stood at b4% while the other three companies Company 1, Company 2 and Company 3 recorded net margin of negative b1%, negative b2% and negative b3%
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Public: Domestic Company – Company 1 (1/4) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol Mumbai
Stock Exchange
Head Office
Products and Services Category
Products/Services
Wind Sector
Key People
Project Services
Name
Designation
Person 1
Chairman
Person 2
Director
Person 3
Director
Person 4
Director
Others
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Public: Domestic Company – Company 1 (2/4) Financial Snapshot Total Income
INR bn
300
-a2
Key Ratios Net Profit/Loss -c2
a1
0
-b2
200 100
INR bn
b1
c1
-d2
-20
d1
-40
0
-60 2010
2011
2012
2013
Financial Summary • It reported total Income of INR XX mn in FY 2013, registering an increase of X per cent over FY 2012 • It earned an operating margin of X.X per cent in FY 2013 an increase of X.X percentage points over FY 2012 • The company reported debt to equity ratio of X.XX in FY 2013, an increase of X.X per cent over FY 2012
2013
2012
2011
2010
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Key Financial Performance Indicators Market Capitalization (INR bn) Total Enterprise Value (INR bn) EPS (INR) PE Ratio (Absolute)
y-o-y change (2013-12)
Cost Ratios
• Company earned a net profit of INR XX mn in FY 2013, as compared to net profit of INR Y mn in FY 2012
Indicators
Particulars
Value (19/03/2014)
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
WIND POWER MARKET IN INDIA 2014.PPT
Decline
17
Public: Domestic Company – Company 1 (3/4) Key Business Segments
Key Geographic Segments
Segment 1
Segment 3
Region 1
Region 3
Region 5
Segment 2
Segment 4
Region 2
Region 4
Others
100% 50% 0%
100%
a1% a3% 2010
b1% a2% a4%
b2%
c1% b3%
2011
c2% 2012
d1% c3%
d2% 2013
50% d3%
0%
p1%
q1%
p2%
p3% p5%
p4% p6%
2010
q2% q3% 2011
s1%
r1% q4% q5% q6%
r2% r3%
r4% r5% r6%
2012
s2% s3% s6%
s4% s5%
2013
Business Highlights Description
News
Overview
• Company 1 has operations across Asia, Australia, Europe, Africa and North and South America • It is the largest wind turbine manufacturer in India
Expansion
• It added ‘m’ MW in FY 2011-12 that ensured the company’s leadership in India for the 14th time • Suzlon powered ‘XY Wind Plant’ resulted in crossing of 1000 MW (1 GW) of installation capacity in 201112
• In 2012-13, the company crossed ‘n’ GW in global installations Achievements
• It was awarded "6th Integrated Marketing Effectiveness Awards (UA&P Tambuli Awards)" award for “Best Insights and Strategic Thinking” and “Best Innovative and Integrated Media Campaign” in 2012-13 • Ranked 6th in ‘Global Transnational companies Survey’ by the Indian School of Business, Hyderabad and Brazil's Fundacao Dom Cabrall
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Public: Domestic Company – Company 1 – SWOT Analysis (4/4)
S
W
O
T
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Private: Foreign Company – Company 2 (1/5) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. Website Year of Incorporation
Mumbai
Products and Services
Head Office
Products/Services
Key People Name
Designation
Person 1
Director
Person 2
Director
Person 3
Director
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Private: Foreign Company – Company 2 (2/5) Shareholders of the Company as on 30/09/2013 Name
No. of Shares held
Ownership Structure Segment 1
100.00%
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Private: Foreign Company – Company 2 (3/5) Financial Snapshot Total Income
Key Ratios Net Profit / Loss
Particulars
INR bn 30
INR bn
a2
b2
25
5
c2
0
20
-5
15
d1
10
-15
5
0
-10
a1
b1
2010
2011
c1
d2
2012
2013
-20
-25
Financial Summary
2012
2011
2010
Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios
• It reported total Income of INR XX mn in FY 2013, registering an increase of X per cent over FY 2012
Leverage Ratios
• The company reported debt to equity ratio of X.XX in FY 2013, an increase of X.X per cent over FY 2012
2013
Profitability Ratios
• Company earned a net profit of INR XX mn in FY 2013, as compared to net profit of INR Y mn in FY 2012
• It earned an operating margin of X.X per cent in FY 2013 an increase of X.X percentage points over FY 2012
y-o-y change (2013-12)
Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
WIND POWER MARKET IN INDIA 2014.PPT
Decline
22
Private: Foreign Company – Company 2 (4/5) Business Highlights Description
News • Company 1 is a wholly-owned subsidiary of the ‘A’ group based in Country 1
Overview
• It is a world leader in the design, manufacture, installation and maintenance of wind turbines, having installed more than ‘p’ MW in over 20 countries
• It will invest INR ‘q’ mn to set up a wind turbine factory in Chennai, with an annual production capacity of
Expansion Plans
‘r’ MW
• With this, it would have invested around INR ‘s’ mn in India to set up wind turbine manufacturing facilities
• It recently bagged an order from Company B, a subsidiary of Company C for commissioning ‘t’ MW of Recent Contracts
wind turbines
• It has signed an Engineering, Procurement and Construction (EPC) contract to build the project and supply ‘u’ MW to a wind farm from Company D, in District 1, State 1
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Private: Foreign Company – Company 2 – SWOT Analysis (5/5)
S
W
O
T
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