Clouds of insolvency are hovering over Inox Wind’s future as the wind energy sector in India decisively moves from feed-in tariff regime to competitive auctions.

Inox Wind, an integrated wind energy solutions provider in India, has claimed that it is in ‘excellent’ financial health after a government body ordered to initiate insolvency proceedings against the company. The government body was forced to take the decision after the company failed to make payment for import shipment of some products.

“Except for a simple denial in response sent by the respondent, there are no other circumstances which can be considered to say that the corporate debtor has raised a dispute”, Inox Wind said in a statement while announcing its plan to challenge the order.

Inox Wind had reported a 23% decline in revenue for FY2016-17 to Rs 3,415 crore ($530 million) while net profit fell by 34% to Rs 302 crore ($47 million) during the same period. In May, the company had stated that it a large percentage of its portfolio would take a hit as the market moves from feed-in tariff regime to competitive auctions.

The first wind energy auction in India saw significant competition among bidders who were willing to set up more than twice the capacity on offer. The Ministry of New and Renewable Energy announced an aggressive roadmap to auction 5-6 gigawatts wind capacity every year.

Inox, itself, secured rights to develop 250 megawatts project in that state of Gujarat in the first-ever auction. The company would receive Rs 3.46/kWh (5.2¢/kWh) as tariff, the lowest for any project in India, ever.

Seeing the aggressive bidding by the project developers several state regulators hit breaks on under-construction projects. State utilities, with backing from the regulators, refused to sign power purchase agreements for these projects. This placed several hundred megawatts wind energy capacity in limbo.

Now, several states have announced that wind energy projects shall be contracted through competitive auctions only and no feed-in tariffs will be offered to wind projects. With a large number of companies operational in the Indian wind energy sector and market share skewed heavily in favour of biggies like Gamesa and Suzlon Energy, it is likely that smaller players, including Inox Wind, could face increased pressure on margins, and thus profits.

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