Gamesa open to taking equity in select customers' companies

The Spanish wind power equipment major Gamesa is open to taking equity positions in customers' companies, if it would help the customers.

However, the company would do so for only “select customers,” Mr Ramesh Kymal, Chairman and Managing Director of Gamesa Wind Turbines Pvt Ltd, the Indian arm of the Spanish major, told Business Line recently.

Gamesa could look at taking up to half the equity, which would typically work out to 15 per cent of the project cost and stay with the company for three to five years, he said.

Currently, Gamesa is talking to one customer – an independent power producer that is putting up a 150 MW project – for an equity deal.

Debt support

Mr Kymal spoke about Gamesa's willingness to take equity positions when asked what kind of financial support the Spanish group could provide its customers. He said that giving debt support – say, through a captive finance company (like most automobile companies do), would not be possible for Gamesa.

Last month, WinWind Power, a Finnish company now owned by the Chennai-based Siva group, announced a deal with Suryachakra Power Corporation of Hyderabad under which it would put up a $350-million, 250-MW wind park for Suryachakra. Under the agreement, the Siva group has committed to take up to 10 per cent equity stake in the special purpose vehicle that would put up the wind farm.

Therefore, when Gamesa's deal with the 150-MW (as yet unnamed) IPP happens, it would be at least the second in the industry, but it would also point to a trend.

Crowded space

And not surprisingly so, because the wind power equipment manufacturing industry in India is getting crowded.

Today, India has 17 wind turbine manufacturers with total annual production capacity of 7,500 MW. (Against this, the country added 2,300 MW of capacity last year.)

In addition, nine new companies are expected to enter the Indian market over the next couple of years. Chinese companies are believed to be very interested to enter India. Therefore, by 2012-13, India could well have over 25 wind power equipment manufacturers. Competition would force equipment vendors to provide sweeteners such as equity support.

Gamesa, the sixth largest wind turbine company in the world, would look to consolidate its position in India. It has had a good start – beginning its operations only in 2010, the company sold 200 machines (of 850 kW capacity each) in that year. In the current year, it expects to sell 700 machines. In 2012-13, by when it would have introduced its 2 MW machine, it expects to sell wind turbines worth 1,000 MW.

Clearly, it believes providing equity support to customers would help its cause.