Dated: Nov 5, 2015
The Inox Group had no expertise in renewable energy, but backed by a successful IPO, third-generation scion Devansh Jain proved that there is profit in the sector
No one can accuse Devansh Jain of false pride. In March 2015, the 28-year-old third-generation scion of Inox Group led one of the biggest initial public offerings (IPOs) that India has seen in the last two years. His company, Inox Wind, the renewable wind energy solutions provider, raised Rs 1,000 crore and was oversubscribed 18 times. “We have a market cap of almost a billion-and-a-half dollars,” says Devansh, who, as director of his company, is the youngest family member to hold a position in the chemicals-to-multiplexes Inox Group.
When he returned to India from the US in 2007, he shadowed his father Vivek (managing director, Gujarat Fluorochemicals Limited) for two years before deciding to enter the renewable energy sector. Neither his father nor his uncle Pavan (chairman and managing director of Inox Air Products) had prior experience in this sector. But the Inox Group was looking to diversify, and given India’s energy deficit and the global thrust towards cleaner forms of energy, Devansh convinced his family of the power of wind.
With a corpus of Rs 40 crore borrowed from Gujarat Fluorochemicals Limited, he started Inox Wind in 2009, at a time when major players like Suzlon and Bharat Forge were stumbling. And in five years, he steered the company onto the path of profitability—a rarity among local wind energy firms. A strong current order book of 1,200 megawatts (MW) and investor confidence place Inox Wind, and Devansh, in a sweet spot. He is confident of its continued success. “Inox Wind is set to become the most profitable company in the ($4 billion) Inox Group this fiscal,” he tells Forbes India.
Devansh believes he cannot afford to fail because of the robust reputation that the Inox Group enjoys. “Some people may say, ‘You are born with a silver spoon, but it is very easy to lose it all in the third generation,” he says.
One of the biggest challenges he faced was an unanticipated policy shift: In 2012, barely three years after Inox Wind was set up, the then Congress government withdrew key benefits, including a generation-based incentive.“Renewables is something that is driven by policy and political intent. But from 2010-2013, there was policy paralysis in the country. Infrastructure was dead, and wind is clearly a part of infrastructure,” he says.
Initially, the name ‘Inox’ worked against him because of its strong branding in the entertainment industry through its multiplex arm, Inox Leisure.“We had to convince them (investors) that we were a technology company with the infrastructure in the heavy duty wind power industry,” says Devansh.
There were other teething problems, too, such as getting industry specialists to join the company, acquiring a massive land bank, getting the right technology, executing projects and building a brand in the market.
Not one to be bogged down by challenges, Devansh decided to ride out the storm. “Failing was never an option for me” he says.
In retrospect, he feels that what helped him achieve this success was his decision to improve cost efficiency, have a lean team, constantly renegotiate the supply chain, and look at anything and everything which spells profitability. “It’s about passion, focus and hard work,” he says.
So far, analysts have been positive about Inox Wind. A 2015 Motilal Oswal report on the company notes that its “strong relationship with independent power producers (IPPs) and global technology leaders, coupled with a ready pipeline of project sites and strategically located manufacturing units, have enabled it to benefit from the wind market revival”.
Devansh is excited about the future given the present government’s focus on renewable energy. “We are doing a lot of projects in Madhya Pradesh and Gujarat, and a few in Andhra Pradesh and Rajasthan this year.” Apart from these, Inox Wind is building a massive wind turbine complex in Madhya Pradesh. “It will be one of Asia’s largest blade plant in terms of size and production capacity. We intend to keep growing this business 15-20 percent year on year,” he says.
He’s already looking for the next big opportunity. “I think Inox Wind has reached a stage where it is very strong and the management team is rock solid. It is virtually on autopilot. So now I am trying to figure out what’s going to be the next avenue for me to build on,” he says.
This Jain sure knows how to turn the wind in his favour.
Inox Wind is a fully integrated player in the wind energy market with state-of-the-art manufacturing plants near Ahmedabad (Gujarat) for blades & tubular towers and at Una (Himachal Pradesh) for hubs & nacelles. Inox Wind manufactures key components that ensure high quality, most advanced technology, reliability and cost competitiveness. Inox WTGs are designed for low wind speed sites of India, and are generating around 6% – 18% more generation viz-a-viz other WTGs models available across the nation. Inox Wind is a fully integrated player in the wind energy market with state-of-the-art manufacturing plants at Una (Himachal Pradesh) for hubs & nacelles, near Ahmedabad (Gujarat) for blades and tubular towers and an integrated manufacturing unit at Barwani district in Madhya Pradesh.
Inox Wind is a fully integrated player in the wind energy market with state-of-the-art manufacturing plants near Ahmedabad (Gujarat) for blades & tubular towers and at Una (Himachal Pradesh) for hubs & nacelles.
Inox Wind is a fully integrated player in the wind energy market with state-of-the-art manufacturing plants at Una (Himachal Pradesh) for hubs & nacelles, near Ahmedabad (Gujarat) for blades and tubular towers and an integrated manufacturing unit at Barwani district in Madhya Pradesh.
Based on our experience of working with customers in India, we believe many customers prefer not to engage in Wind Site acquisition and other processes associated with the development of wind farm projects. Our Company, together with our wholly-owned subsidiaries, IWISL and MSEIL, provides turnkey solutions for wind farm projects. These services include wind resource assessment, site acquisition, infrastructure development, erection and commissioning and long term operations and maintenance of wind power projects.
We manufacture the major components of our WTGs, including nacelles, hubs, rotor blade sets and towers, at our in-house facilities. We have a perpetual license from AMSC, a leading wind energy technology company based in Austria, to manufacture 2 MW WTGs in India based on AMSC’s proprietary technology. Our license in India is exclusive, subject to three existing licenses that AMSC had previously granted for the production and sale of 2 MW WTGs worldwide, including in India. AMSC’s state-of-the-art wind turbine designs range from offerings of 1.65 MW to 10 MW and more than 15,000 MW of installed capacity has been operating globally for multiple years based on AMSC’s designs. We also have a non-exclusive license from WINDnovation for custom-made rotor blade sets. Our Type Class III-B 2 MW WTGs have been designed and developed after due assessment of wind site qualities and conditions across low wind resource locations, such as those in India. Our WTGs are designed and developed with a view to achieving efficient power curves, improved up-times and reducing operations and maintenance costs.
Inox Wind has one of the largest order books in the industry with multiple repeat orders. We continue to strengthen position and increase our market share across IPPs, PSUs, utilities, corporates and retail customers. Based on detailed wind resource assessment, a significant land bank has also been acquired by the company. IWL has the largest project site inventory spread across wind rich states and currently has sufficient land bank for the installation of an aggregate capacity of more than 5,000 MW.
We manufacture the key components of our WTGs in-house. We believe that this helps ensure cost competitiveness, cost-effective logistics and attractive margins. Our license to use AMSC technology reduces our research and development expenses and we operate with a strong focus on controlling operating and financing costs. We have split up our existing manufacturing activities with a view to ensure cost-efficiency. Our existing rotor blade and tower manufacturing facilities are located at our Rohika Unit in Gujarat, which is located adjacent to a highway to facilitate easier handling during transportation to Wind Sites and sea ports, and in relatively close proximity to the states that we believe offer good potential in terms of wind energy production, such as Rajasthan, Gujarat, Maharashtra and Madhya Pradesh. Because nacelles and hubs are more easily transported than rotor blade sets and towers, we currently manufacture nacelles and hubs at our Una Unit in Himachal Pradesh, in order to benefit from certain tax incentives. Our new integrated manufacturing facility at Barwani, Madhya Pradesh is in close proximity to projects in Madhya Pradesh and Rajasthan. In addition, based on our operating and financial performance, we believe that our cost structure is among the most competitive in the wind turbine manufacturing industry. For example, we believe that our operating and net margins are relatively high and that our operating and total cost per MW is relatively low compared to a number of major wind turbine manufacturers inside and outside of India
Our senior management has extensive experience in the quality, engineering, supply chain management, manufacturing, marketing, project development and maintenance of WTGs. Each of our senior managers in charge of these functions has an average of more than ten years of experience in their respective fields and considerable experience in the wind energy industry.
We are a member of the Inox Group, which commenced operations in 1923 and currently operates in the industrial gases, engineering plastics, refrigerants, chemicals, cryogenic engineering, renewable energy and entertainment sectors. The Inox Group, which includes two publicly-listed companies, namely Gujarat Fluorochemicals Limited, or GFL, and Inox Leisure Limited, is a market leader in various industries in India. Our promoter, Gujarat Fluorochemicals Limited, or GFL, has been a pioneer of carbon credits in India and has been among the largest generators of carbon credits globally. GFL is also the largest producer by volume of refrigerants and polytetrafluoroethylene (PTFE), a synthetic fluoropolymer, in India. We believe Inox is a recognized and trusted brand in India. The Inox Group employs more than 8,000 people at more than 100 business units across India, with a distribution network spread across more than 50 countries around the world. We believe that the Inox Group’s long history, business relationships and financial stability instill confidence in our customers who prefer dependable and established suppliers for long-term projects such as wind farms.
