wind assets im-final for upload - ks oils · information memorandum page 2 important notice this im...

Prepared for

WWIINNDD EENNEERRGGYY GGEENNEERRAATTOORRSS OOFF KKSS OOIILLSS LLTTDD

by

SBI CAPITAL MARKETS LIMITED

202, Maker Tower E, Cuffe Parade, Mumbai - 400 005 Tel: +91 22 2217 8300 / Fax: +91 22 2218 0198 / Website: www.sbicaps.com

(A subsidiary of State Bank of India)

OCTOBER 2013 (Strictly Private & Confidential)

IINNFFOORRMMAATTIIOONN MMEEMMOORRAANNDDUUMM

Information Memorandum

IMPORTANT NOTICE

This IM has been prepared for the internal use of prospective buyers to Wind Energy Generators of KS Oils Limited (KSOL), the “Company”, and may contain proprietary and confidential information. This IM has been prepared by SBI Capital Markets Limited (“SBICAP”), inter alia, on the basis of the information and documents available in the public domain, data made available by the KSOL and in‐house databases available to SBICAP as a part of its professional practice & which SBICAP believes to be reliable. SBICAP has not carried out any independent verification for the accuracy or truthfulness of the same. This IM constitutes an opinion expressed by SBICAP and each party concerned has to draw its own conclusions and SBICAP cannot be held liable for any financial loss incurred by anyone based on this IM. Further, on accepting a copy of this IM, the recipient accepts the terms of this Notice, which forms an integral part of this IM and the recipient shall be deemed to have agreed to indemnify SBICAP against any claims that may be raised against SBICAP as a result of or in connection with the data & opinions presented in this IM. The delivery of this IM does not imply that the information in it is correct as of any time after the date set out on the cover page hereof, or that there has been no change in the operation, financial condition, prospects, creditworthiness, status or affairs of the subject or anyone else since that date. Further, capital costs and operating expenditures are subject to uncertainties concerning the effects that change in legislation or economic or other circumstances may have on future events, and different people may have a different view in future. There will usually be differences between projected & actual results because events & circumstances do not occur as expected and those differences may be material. Under the circumstances, no assurance can be provided that the assumptions or data, upon which any projections have been based, are accurate or whether these business‐plan projections will actually materialize. The investment rationale given in this IM is an attempt to draw the picture of the potential which the Wind Energy Generators of KS Oils Limited may have, however the prospective bidders are advised to carry out their own due diligence of the same. Neither SBICAP, nor State Bank of India or any of its associates, nor any of their respective directors, employees or advisors make any expressed or implied representation or warranty and no responsibility or liability is accepted by any of them with respect to the accuracy, completeness or reasonableness of the facts, opinions, estimates, forecasts, projections, or other information set forth in this IM or the underlying assumptions on which they are based or the accuracy of any computer


model used and nothing contained herein is, or shall be relied upon as a promise or representation regarding the historic or current position or performance, or any future events or performance of the Wind Energy Assets of KSOL. This IM is divided into sections & sub‐sections only for the purpose of reading convenience. Any partial reading of this IM may lead to inferences, which may be at divergence with the conclusions and opinions based on the entirety of this IM. Neither this IM, nor the information contained herein, may be reproduced or passed to any person or used for any purpose other than stated above.


TABLE OF CONTENTS

IMPORTANT NOTICE ............................................................................................................................... 2

TABLE OF CONTENTS .............................................................................................................................. 4

LIST OF TABLES ......................................................................................................................................... 6

LIST OF FIGURES ....................................................................................................................................... 7

LIST OF ABBREVIATIONS ...................................................................................................................... 8

1. EXECUTIVE SUMMARY ........................................................................................................ 10

1.1. INTRODUCTION ...................................................................................................................... 10

1.2. THE COMPANY ........................................................................................................................ 10

1.3. DETAILS OF WIND ASSETS AVAILABLE FOR SALE ....................................................... 11

1.4. INVESTMENT RATIONALE ................................................................................................... 14

1.5. SECURITY CHARGE OVER ASSETS ..................................................................................... 18

1.6. MODE OF TRANSACTION ..................................................................................................... 18

1.7. CONCLUSION ........................................................................................................................... 19

2. INTRODUCTION .................................................................................................................... 20

3. ABOUT THE COMPANY ....................................................................................................... 22

3.1. GENERAL BACKGROUND .................................................................................................... 22

3.2. PROFILE OF PROMOTERS AND DIRECTORS ................................................................... 22

3.3. SHAREHOLDING PATTERN ................................................................................................. 23

3.4. PAST FINANCIALS OF THE COMPANY ............................................................................ 23

4. DETAILS OF WIND ASSETS ON SALE ............................................................................. 26

4.1. LOCATION AND SITE ............................................................................................................. 26

4.2. WIND TURBINE CONFIGURATION AND TECHNICAL SPECIFICATIONS .............. 26

4.3. MANUFACTURERS/SUPPLIERS’ CREDENTIALS & O&M OPERATORS ..................... 28

4.4. DETAILS OF OFF TAKE ARRANGEMENT ......................................................................... 30

4.5. PLANT LOAD FACTOR (PLF) ................................................................................................ 31

5. INVESTMENT RATIONALE ................................................................................................. 32

5.1. OPPORTUNITY TO ACQUIRE OPERATIONAL WIND ASSETS ..................................... 32

5.2. BENEFIT OF ACCELERATED 80% DEPRECIATION ......................................................... 32

5.3. ASSURED POWER OFFTAKE ................................................................................................. 33

5.4. FUTURE POTENTIAL / UPSIDE FOR THE BUYER ............................................................ 33

5.5. LOCATION BENEFIT/IMPORTANT SITES .......................................................................... 34


5.6. GREEN ENERGY INITIATIVE ................................................................................................ 35

6. MARKET SCENARIO ............................................................................................................. 37

6.1. INTRODUCTION ...................................................................................................................... 37

6.2. ELECTRICITY DEMAND AND SUPPLY SCENARIO ........................................................ 37

6.3. RENEWABLE ENERGY ............................................................................................................ 38

6.4. WIND POWER SCENARIO IN INDIA .................................................................................. 52

6.5. GOVERNMENT AND REGULATORY STRUCTURE FOR POWER IN INDIA.............. 53

6.6. REGULATIONS AND INCENTIVES FOR RENEWABLE ENERGY................................. 54

6.7. INCENTIVES PROVIDED BY STATE GOVERNMENTS .................................................... 55

6.8. REGULATIONS AND INCENTIVES FOR RENEWABLE ENERGY IN MP .................... 55

6.9. REGULATIONS AND INCENTIVES FOR RENEWABLE ENERGY IN RAJASTHAN . 58

7. CONTRACTUAL AGREEMENTS ........................................................................................ 61

7.1. LAND DETAILS ........................................................................................................................ 61

7.2. POWER PURCHASE AGREEMENTS .................................................................................... 62

7.3. O & M CONTRACTS ................................................................................................................ 64

8. TRANSACTION STRUCTURE ............................................................................................. 67

8.1. DEBT OUTSTANDING............................................................................................................. 67

8.2. SECURITY CHARGE OVER ASSETS ..................................................................................... 67

8.3. MODE OF TRANSACTION ..................................................................................................... 67

9. CONCLUSION .......................................................................................................................... 69


LIST OF TABLES

Table 1: Brief Profile of the Company ....................................................................................... 22 Table 2: Brief Profile of Promoters and Directors .................................................................... 22 Table 3: Shareholding Pattern .................................................................................................... 23 Table 4: Snapshot of P&L ............................................................................................................ 23 Table 5: Snapshot of Balance Sheet ............................................................................................ 24 Table 6: Snapshot of P&L and Asset Profile of Wind Energy* (78 MW) ............................. 25 Table 7: Details of WTGs in MP ................................................................................................. 27 Table 8: Details of WTGs in TN ................................................................................................. 27 Table 9: Details of WTGs in Rajasthan ...................................................................................... 28 Table 10: Off take Agreements Details ...................................................................................... 30 Table 11: All India Demand Supply Position ........................................................................... 37 Table 12: Breakup of All India Demand/Supply position for 2012‐13 ................................. 38 Table 13: RPOs for Renewable Energy ...................................................................................... 41 Table 14: Floor and Forbearance price for RECs till FY2012 .................................................. 46 Table 15: Floor and Forbearance price for RECs till FY2017 .................................................. 46 Table 16: Summary of RECs issued till date ............................................................................ 47 Table 17: Summary of RECs traded on IEX .............................................................................. 48 Table 18: REC Accreditations and Registrations ..................................................................... 49 Table 19: State Wise Wind Installed Capacity upto 31.02.2013 ............................................. 52 Table 20: Tariff Details in MP ..................................................................................................... 56 Table 21: Tariff Details in Rajasthan for FY 2013‐14 ............................................................... 59 Table 22: Tariff Details in Rajasthan .......................................................................................... 59 Table 23: PPAs in MP .................................................................................................................. 62 Table 24: PPAs in TN ................................................................................................................... 63 Table 25: PPAs in Rajasthan ....................................................................................................... 64 Table 26: O&M agreement with Suzlon .................................................................................... 64 Table 27: O&M agreement with Enercon ................................................................................. 66 Table 28: Debt Outstanding position ........................................................................................ 67


LIST OF FIGURES

Figure 1 : Renewable Energy Selling Options........................................................................... 42 Figure 2 : Claiming Benefits from REC ...................................................................................... 45 Figure 3 : Process for CER issuance ............................................................................................ 51 Figure 4 : Wind Power Density map of India ........................................................................... 53


LIST OF ABBREVIATIONS

AVVNL Ajmer Vidyut Vitran Nigam Ltd CBI Central Bank of India CDM Clean Development Mechanism CDR Corporate Debt Restructuring CER Certified Emission Reduction CERC Central Electricity Regulatory Commission COD Commercial Operation Date CWET Centre for Wind Energy Technology DISCOM Distribution Company GBI Generation Based Incentive HT High Tension IDBI IDBI Bank Limited IM Information Memorandum JVVNL Jaipur Vidyut Vitran Nigam Ltd KWh Kilowatt hour LD Liquidated Damages MAT Minimum Alternate Tax Mn Million MNRE Ministry of New and Renewable Energy MoEF Ministry of Environment and Forest MP Madhya Pradesh MU Million units MW Mega Watt O&M Operation and Maintenance Phoenix ARC Phoenix ARC Private Limited PLF Plant Load Factor PPA Power Purchase Agreement REC Renewable Energy Certificates RPO Renewable Purchase Obligation SBI State Bank of India SEB State Electricity Board SERC State Electricity Regulatory Commission SNA State Nodal Agency SWOT Strength Weakness Opportunity and Threat TN Tamil Nadu TNEB Tamil Nadu Electricity Board TNEB Tamil Nadu Electricity Board TNW Tangible Net Worth TRA Trust & Retention Account UNFCCC United Nations Framework Convention on Climate Change


VER Voluntary Emission Reduction WEG Wind Energy Generator WTG Wind Turbine Generator


1. EXECUTIVE SUMMARY

1.1. Introduction

KS Oils Limited (“The Company”), promoted by Mr. R.C. Garg, was established in the year 1985

as an edible oil refining unit with a production capacity of 60 Tonnes of oil per day. The

Company now manufactures processes and markets Mustard Oil, Palm Oil, Soyabean Oil &

Vanaspati and has wind energy generation capacity of 78 MW. The Company presently has

manufacturing facilities at five locations viz Morena, Guna, Kota, Ratlam, and Haldia.

The Company, now, in consultation with the wind mill term loan lenders proposes to sell whole

or part of the Wind Turbine Generators (WTGs) assets of the Company in order to repay the

outstanding debt (along with interest etc) of the Company to the wind mill term loan lenders.

The wind mills on offer for sale amount to 67.2 MW (82 WTGs) from four lenders i.e SBI, IDBI,

Phoenix ARC, & Central Bank of India.

1.2. The Company

Name KS Oils Ltd

Year of Incorporation 1985

Constitution Public Limited Company

Promoters Mr Ramesh Chand Garg

Industry Edible Oils

Wind Asset Location Tamil Nadu, Rajasthan, Madhya Pradesh, Gujarat

Registered Office Jiwajiganj, Morena, Madhya Pradesh – 476 001

KS Oils Limited is engaged in the business of manufacturing, processing and marketing of

branded mustard and other refined edible oils. It has integrated capacities for crushing, refining,

solvent extraction and Vanaspati.

The Company offers a wide range of products under the brand name Kalash & Double Sher in

mustard oil segment, Kalash Soya, Kalash Sunflower in refined oil segment, KS Gold Plus in

Vanaspati segment. Also one of its byproduct is De‐Oiled Cake (DOC), which is used as an


ingredient in cattle feed. It has in‐house packaging department for meeting the Company’s

requirement of tin, HDPE jars and PET bottles within the range of 200 ml to 15 litres.

The Company has acquired, through its subsidiary M/s K.S. Natural Resources Pte Limited based

in Singapore, 138,000 acres of land in Indonesia and Malaysia to ensure supply of Crude Palm Oil

for its refineries.

The Company also has Wind Energy Generation facilities with a capacity to generate 78 MW of

green power through its 92 wind turbine generators in the state of Madhya Pradesh, Rajasthan,

Gujarat and Tamil Nadu.

1.3. Details of Wind assets available for sale Currently the wind energy assets on sale is 67.2 MW (82 WTGs) spread across the states of Tamil

Nadu, Madhya Pradesh and Rajasthan (“WTGs on Sale”). The state wise position of capacity

and number of turbines is shown below.

Madhya Pradesh

There are total 30 units of WEGs located in Dewas, Madhya Pradesh. Out of these 30 units,

28 units are at Rathedi Hills and 2 are at Nagda Hills.

Tamil Nadu

There are total 33 units of WEGs located in Tamil Nadu. Out of these 33 units, 25 units are at

Palladam, 5 units are at Pushpathur and 3 units at Tenkasi.


Rajasthan

There are total 19 units of WEGs located in Jodhpur, Rajasthan. In Jodhpur, 4 units are at Bastwa,

5 units at Ratangarh and rest 10 units are there in Salodi.

1.3.1. Details about commissioning of WTGs are as follows:

Year of Commissioning Capacity (in MW) Units

2005-06 2.5 2 2007-08 22.3 27 2008-09 22.8 30 2009-10 19.6 23 Total 67.2 82

WTGs have been supplied by Suzlon, Enercon and Vestas. Details of the number of

units provided by each supplier and their capacities are as follows:

1.3.2. Plant Load Factor (PLF)

The Net Generation Data (Net of Auxiliary Power consumption) of four years has been taken and

the turbine wise PLF has been calculated on the units actually billed. The detailed PLF turbine

wise is attached as Annexure II. A snapshot of year wise PLF is as under:

2009‐10 2010‐11 2011‐12 2012‐13 Installed Capacity (MW)

67.2 67.2 67.2 67.2

PLF 22% 19% 20% 22%


1.3.3. Details of Off take arrangement

Since the wind energy assets of KS Oils on sale are spread across three different states the off take

arrangement varies across the states according to the state policy and pricing framework. The

board terms for off take for the Company are as given below:

State MP (PPA) MP (Captive) TN Rajasthan

Capacity (in MW) 4.8 20.1 20.8 21.5

Offtake Arrangement

MP Power Trading Co.

Captive consumption of KS Oils with wheeling

charges @ 2%

Tamil Nadu Electricity Board

7.5MW with Ajmer VVNL; 8.0 MW Jaipur VVNL and 6.0 MW with Jodhpur VVNL

Term (years) 20 20 20 20

Tariff (per unit)

Rs.4.03,3.86,3.69,3.52for first four years & 3.36 for remaining

yrs

Surplus generation sold at Rs 2.9 to MP Power Trading Co.

Ltd

Rs 2.9‐3.39

7.5 and 8 MW‐ Rs 3.52&3.63with

escalation of 0.2 paise for 12 year then 0.1 paise for remaining years. For 6 MW Rs

4.28 fix

Payment Credit Period 30 days 30 days 30 days 30 days

Default by State Non‐payment for 90 days

Non‐payment for 90 days by Company

Non‐payment for 90 days


Option with Developer if State Defaults

Terminate and sell in open market or

third party.

Terminate and sell in open market or

third party.

Terminate and sell in open

market or third party.

Terminate & sell to any third party after 10 years of operations

1.3.4. Tariff Details

Project Capacity (MW) Tariff (Rs/unit) Escalation in Tariff (In Rs) Suzlon M.P. 2.5 Wheeling Excess generation @2.25/unit

Suzlon Rajasthan 7.5 3.52

3.48 increase of 2 paise/ yr upto 12 th year subsequently 1 paise increase

Suzlon TN 6 2.9 Fixed Vestas TN 6 2.9 Fixed

Enercon MP 4.8 3.69 4.03,3.86,3.69,3.52 for first four years & 3.36 for remaining


Project Capacity (MW) Tariff (Rs/unit) Escalation in Tariff (In Rs) year

Enercon MP 6.4 Wheeling Excess generation @2.9/unit Enercon MP 11.2 Wheeling Excess generation @2.9/unit

Enercon Rajasthan 8 3.63


Enercon TN 4 3.39 Fixed Suzlon TN 4.8 3.39 Fixed Suzlon Rajasthan 6 4.28 Fixed

1.4. Investment Rationale

1.4.1. Opportunity to acquire operational wind assets

The ongoing process of wind asset sale presents an opportunity to invest in the operating wind

power generating assets. The said acquisition will mitigate the risk of installation and

commissioning as the assets are fully operational. Besides, as most of the assets are relatively new,

the balance life is more than 20 years which is available for generation.

Moreover, this opportunity enables the buyer to expand its wind power generation portfolio by

67.2 MW in one go.

1.4.2. Benefit of Accelerated 80% Depreciation

The benefit of accelerated depreciation (80%) may be available to the prospective buyer on the

“Actual Cost” i.e. the cost of the assets to buyer. After the latest Income Tax notification

(Notification No. 15/2012 [F.No. 149/21/2010‐SO (TPL)] S.O 694 (E), dated 30‐03‐2012), the

depreciation is restricted to 15% on wind mills installed after 31‐03‐2012.

Hence, due to earlier installation of the wind mill on sale, the buyer may be able to enjoy

depreciation benefit of 80% which is no longer available on new installation.


Further, benefit of additional depreciation @20% available u/s 32(1)(iia) has been extended to

power generating and distributing companies on installation of new plant and machinery.

Therefore, on new installation by buyer, wind power projects can avail 35% depreciation in the

first year of commissioning and 15% in the subsequent years.

Representations have been made to reintroduce 80% depreciation rate for wind energy assets but

till date no notification has come.

1.4.3. Future Potential / Upside for the Buyer

PPAs Transfer/Termination

In case the PPAs with all three state’s distribution companies are terminated, as per

company’s information, the buyer has the option to sell the power to third party on the

applicable industrial tariff to HT consumer in that state, or the buyer can sell the power to

state distribution Company on the Average Pooled Purchase Cost (APPC). Apart from that,

the Company is also currently using around 20 MW of the capacity in captive use, which

will be available to buyer for selling in the market. Exercising the option to sell power to

third party on the applicable HT industrial tariff may generate additional revenue of

approximately Rs 13 Crores (in excess of the revenue generated from PPA tariff) every year.

Alternatively, the buyer may seek transfer / novation of existing PPAs in its name after

obtaining consent from the relevant counterparties to the PPAs. However, in case of transfer

/ novation of PPAs, the benefit of Renewable Energy Certificates shall not be available to the

buyer. Further, the Power Purchase and Wheeling Agreement dated June 09, 2009 entered

into between KS Oils Ltd. and MP Power Trading Company Ltd. for a composite capacity of

7.2 MW includes a total of 9 nos. of WEGs of 800 KW each, out of which only 3 WTGs (being

Location Nos. 45, 46 and 53) are included in the WTG on Sale. Accordingly a carve out for

the said 3 WTGs would be required from the above‐mentioned PPA.

REC Benefit

If the buyer decides to terminate the PPA in all states and opt for selling power to third

party on mutually agreed price or to state distribution company on the Average Pooled


Purchase Cost (APPC), then the benefit of availing the Renewable Energy Certificates after

cooling period of 3 years will also be there. If this option of selling power to third party at

mutually agreed price or to state distribution Company on the Average Pooled Purchase

Cost (APPC) is chosen, then there may be an additional benefit every year of approximately

Rs 17 Crores (available only after 3 years of PPA termination) from RECs at presently

applicable floor price of Rs. 1500/MWh.

CDM Benefit

Out of total of 67.2 MW, approximately 50% are registered for issuance of CERs and

remaining 50% are in advanced stages of approval. Madhya Pradesh and Tamil Nadu allows

100% of CDM benefits to developer in first year and thereafter reducing it by 10% every year

till the sharing becomes 50:50 between the developer and the distribution licensee. In the

state of Rajasthan this sharing is 25:75 between distribution licensee and the developer

respectively.

VCU/VER Benefit

Apart from CER, all the projects will be eligible for Voluntary Carbon Unit (VCU)/Voluntary

Emission Reduction (VER). The buyer can claim VCU/VER for previous two years before

approval of the project for CER. As informed by the Company, VER corresponding to 8.5

MW has already been utilised by them and VER for remaining will be available to the buyer.

Therefore the approved projects for CERs will generate one time additional cash flow on

account of VCUs / VERs.

1.4.4. Location Benefit/Important sites

The WEGs are installed at such locations which are one of the most suitable sites for energy

generation through wind in the country. The above mentioned WEGs have the first mover

advantage due to their site locations and will command better generation than the wind farms

which will be installed at other sites.


1.4.5. Green Energy Initiative

Global concern over pollution and several related issues caused by the increase in green house

gas emission and consequent changes in climate have resulted in a paradigm shift in the

approach towards development of the clean energy in many countries including India.

The need for adoption of clean technology has been seriously considered by the Government of

India since the Sixth Five Year Plan. Consequently there has been a considerable increase in the

use of renewable energy sources like the wind energy in India’s transition to a sustainable

energy base.

Wind as Renewable Source of Energy

In regions with acute energy shortage, wind energy generated electricity is techno‐

economically viable in view of the very low gestation periods required by wind power plants

and its modular (scalable) installation characteristics as compared to that of conventional

power plants. The pace of development of the wind energy has been accelerated by various

promotional policies and fiscal and tax incentives provided by the State and Central

Government. Thus wind energy has a merit to be included not only in diversified energy

portfolio of a company but to general portfolio of manufacturing.

Renewable Purchase Obligation

Renewable Purchase Obligation (RPO) is the obligation mandated by the State Electricity

Regulatory Commission (SERC) under the Electricity Act 2003, to purchase minimum level of

renewable energy out of the total consumption in the area of a distribution licensee. National

Action Plan on Climate Change (NAPCC) stipulated a dynamic minimum renewable purchase

target of 5% (of total grid purchase) may be prescribed for 2009‐10 and this is estimated to

increase by 1% each year for a period of 10 years, thereby reaching 15% by 2020.

In view of the above, there is bright future ahead for the energy generation through wind.


Increasing cost of conventional energy

As the prices of conventional fuel for power generation are increasing day by day, the cost of

power generated through conventional sources is increasing. Therefore investing in renewable

source of power generation is demand of future.

Corporate Social Responsibility

The addition of green energy generation to a company’s portfolio increases the visibility, as the

company is obligating its responsibility towards society. The company can claim wind energy

generation as their initiative towards fulfilling their corporate social responsibility.

1.5. Security charge over assets The Company has given exclusive first charge over wind mill assets to SBI, PHOENIX ARC

(assignee of Axis Bank Ltd), CBI and IDBI. The turbine wise detail of the first charge with their

respective lender is given as Annexure III.

1.6. Mode of Transaction As of now, it is proposed that the sale of wind mill assets will be considered on slump sale basis.

Slump sale has been defined in section 2(42C) of the Income‐tax Act. It means transfer of one or

more of the undertaking as a whole as a result of the sale for a lump sum consideration.

It has been understood that the benefit of accelerated depreciation (80%) may be available to the

prospective buyer on the “Actual Cost” (Cost of assets in the hands of buyer), even after the

Income Tax fourth amendment rule, 2012. The aforementioned amendment restricts depreciation

to 15% on wind mills installed after March 31st, 2012. The extract of opinion is annexed as

Annexure IV.

The benefit of unused 80 IA may not be transferred to the prospective buyer in this case.

The prospective bidders are requested to give their quote which they think is the net amount

payable on a cash and debt free basis and assuming zero working capital. For the purpose of the

bid, bidders are advised to assume that there are no current asset or current liability with the


wind energy undertaking and all other statutory cost implications like stamp duty are to be borne

by the bidders themselves.

1.7. Conclusion

In view of the aforementioned details about the wind energy, this presents an attractive

opportunity to invest in wind energy generation business.

The present IM is meant for circulating the factual and required information among the potential

buyers, which will help them to appreciate the assets proposed for sale. However, the potential

buyers are advised to carry out their own due diligence and valuation exercise before bidding for

the same.

Contact details of SBICAP officials are provided as Annexure V for any clarifications.


2. INTRODUCTION

KS Oils Limited (“The Company”), promoted by Mr. R.C. Garg, was established in the year 1985

as an edible oil refining unit with a production capacity of 60 Tonnes of oil per day. The

Company now manufactures processes and markets Mustard Oil, Palm Oil, Soyabean Oil &

Vanaspati and has wind energy generation capacity of 78 MW. The Company presently has

manufacturing facilities at five locations viz Morena, Guna, Kota, Ratlam, and Haldia.

Since FY 2011, the company has been facing difficulties with its operations. As per the audited

results of 15 months ending June 2011, the Company has registered a net loss of

Rs. 355 Crores. The Company, now, in consultation with the wind mill term loan lenders

proposes to sell whole or part of the Wind Turbine Generators (WTGs) assets of the Company in

order to repay the outstanding debt (along with interest etc) of the Company to the wind mill

term loan lenders.

The Company’s wind energy generation facilities on sale has a total capacity of 67.2 MW

comprising of 82 Wind Turbine Generators (WTGs), spread across the states of Tamil Nadu (33

units, 20.8 MW), Madhya Pradesh (30 units, 24.9 MW) and Rajasthan (19 units, 21.5 MW). Major

suppliers of WTGs include Suzlon (29 units, 26.8 MW), Enercon (43 units, 34.4 MW) and Vestas

(10 units, 6 MW). Capacity of each WTG ranges from 0.6 MW to 1.5 MW. A part of the energy

generated in Madhya Pradesh (MP) is being used for captive purpose by K S Oils Limited

through wheeling arrangement after paying wheeling charges @ 2% of the energy wheeled. The

Company is having long term Power Purchase Agreements (PPA’s) with respective Discoms of

MP for the remaining portion of the energy generated. The company has also entered into

Operation and Maintenance Agreement with the respective suppliers of WTGs (for Vestas units,

the O&M is with I‐Fox Renewable and Infra Pvt Ltd).

The Plant Load Factor (PLF) calculated on billed units i.e net of Auxiliary Power Consumption

for FY 2009‐10, FY 2010‐ 2011, FY 2011‐2012 and FY 2012‐13 were in the range of 22%, 19%, 20%

and 22% respectively.


The total revenue generated from Wind Energy (78 MW) for FY 2010‐2011, FY 2011‐12 and FY

2012‐13 was approximately Rs 45 Crores, Rs 44 Crores and Rs 45 Crores respectively (inclusive of

captive sales).


3. ABOUT THE COMPANY

3.1. General Background Table 1: Brief Profile of the Company

Name KS Oils Ltd

Year of Incorporation 1985

Constitution Public Limited Company

Promoters Mr Ramesh Chand Garg

Industry Edible Oils

Wind Asset Location Tamil Nadu, Rajasthan, Madhya Pradesh, Gujarat

Registered Office Jiwajiganj, Morena, Madhya Pradesh – 476 001

3.2. Profile of Promoters and Directors Table 2: Brief Profile of Promoters and Directors

Sl. No. Name Designation Profile

1 Shri Ramesh Chand Garg Chairman/Executive Director/Promoter Director

Promoter of the Company and is having more than 30 years of experience in the industry.

2 Shri Sourabh Garg Non‐Executive Director/ Promoter Director

Son of Mr RC Garg. He was involved in the project expansions of the Company.

3 Shri B.N. Singh Independent Director

He is Ex‐Additional Director of Industrial Department of M.P and has worked as Senior Advisor to MPSIDC, Hindustan Motors, Pithampur and Oriental Paper Mills & Amlai (Shahdol).

4 Shri P.K. Mandloi Independent Director

He is having experience in banking industry and guides the Company in financial matters.

5 Dr. R.S. Sisodia Independent Director

He is Doctorate in Agriculture and looks after quality control and R&D.

6 Mr. Arvind Pandalai Independent Director

He has vast experience in State Trading Corporation of India. He has specialised in International Trade, Project Management, Joint Venture, Financial Management etc.


Sl. No. Name Designation Profile

7 Mr. Umesh Jain Nominee Director

He has been with IDBI for quite a long time and is currently in Large Corporate Group (LCG) business vertical of IDBI Bank at Corporate Centre in Mumbai.

8 Mr. Davesh Agarwal Executive Director

He has been associated with the Company for the last ten years. He was handling the finance and administration functions of the Company as vice president.

3.3. Shareholding pattern The company went public in 1994 and the share holding pattern as on June 30, 2013 is given below:

Table 3: Shareholding Pattern

Holderʹs Name No of Shares % Share Holding Promoters 34602105 7.54% General Public 230142431 50.12% Corporate Bodies 89597980 19.51% Financial Institution/Banks 1111131 0.24% Foreign Institutional Investors 18117298 3.95% NRI 85160019 18.55% Others 449073 0.10% Total 459180037 100.00% Source NSE

3.4. Past Financials of the Company

Working Result

Table 4: Snapshot of P&L (In Rs Cr.)

Period ended Mar 2008 Mar 2009 Mar 2010 Jun 2011 (15 months)

Dec 2012 (18 months)

Net sales 2044 3147 4027 5605 3464

EBIDTA 219 352 465 35 ‐543

Interest 37 74 156 312 442Depreciation 12 27 53 80 95


Period ended Mar 2008 Mar 2009 Mar 2010 Jun 2011 (15 months)


Operating profit/(loss) 169 251 255 (357) (1080)

Non‐oper. Income/(loss) 13 10 11 13 11

Tax 62 92 42 11 10Net profit/(loss) 121 169 224 (355) (1372)

EBITDA/Net Sales (%) 10.71% 11.18% 11.54% 0.62% ‐16%

PAT/Net Sales (%) 5.90% 5.38% 5.57% ‐6.33% ‐40%

Financial position

Table 5: Snapshot of Balance Sheet (In Rs Cr.)

As at Mar 2008 (12 Months)

Mar 2009(12 Months)

Mar 2010 (12 Months)

Jun 2011 (15 Months)


Net fixed assets 258 633 1,062 1065 983CWIP 184 353 79 69 26Investments 18 78 196 213 155Other Non Current Assets

0 0 0 0 45

Current assets 904 1,353 2,452 3046 2046Current liabilities (Incl. WC Bank Borrowing)

547 (203)

1,076 (603)

1,816 (1057)

2203 (1495)

1796(973)

Long‐term liabilities 123 434 520 1048 1407

Net worth 694 907 1,453 1142 53Net worth represented byShare capital 33 36 41 43 306Reserves 610 871 1,339 1098 (252)Deferred Govt Grant 1 1 1 1 0

Equity share entitlement 50 0 71 0 0

Debt‐equity ratio 0.18 0.48 0.36 0.92 25.94

TOL/TNW 0.97 1.66 1.61 2.85 59.06Current ratio 1.65 1.26 1.35 1.38 1.14


Wind Asset Financials

Table 6: Snapshot of P&L and Asset Profile of Wind Energy* (78 MW) P&L (In Rs Cr)

Particulars

2006‐07 (12

Months)

2007‐08 (12

Months)

2008‐09 (12

Months)

2009‐10 (12

Months)

2010‐11 (12

Months)

2011‐12 (12

Months)

2012‐13 (12

Months) Total Revenue** 1.74 4.33 24.31 50.46 44.91 43.57 45.24 Total Expenses 0.02 0.07 0.44 5.64 6.19 16.37 # 9.04## EBITDA 1.72 4.27 23.88 44.81 38.72 27.20 36.20 Depreciation 0.62 2.46 12.14 20.60 22.21 22.21 22.25 EBIT 1.09 1.81 11.74 24.21 16.51 4.99 13.95 **The Total Revenue from Wind Energy also includes revenue from captive sale. # Expenses including Exchange Rate Fluctuations pertaining to one of the ECB lender (not covered under this sale process) of Rs. 3.40 Cr. and Wind Mill claim reversal of Rs. 6.15 Cr. ## Expenses including Exchange Rate Fluctuations pertaining to one of the ECB lender (not covered under this sale process) of Rs. 1.69 Cr Asset Profile (In Rs Cr) Particulars as on March, 31st 2006‐07 2007‐08 2008‐09 2009‐10 2010‐11 2011‐12 2012‐13 Fixed Assets ‐ 165.64 298.80 387.49 365.28 343.06 320.81 Capital WIP 7.68 19.47 29.24 ‐ ‐ ‐ ‐ Total 7.68 185.11 328.04 387.49 365.28 343.06 320.81 *Unaudited results, as segment wise audited results are not available.


4. Details Of Wind Assets On Sale

4.1. Location and Site Currently the WTGs on sale is 67.2 MW (82 WTGs), spread across the states of Tamil Nadu,

Madhya Pradesh and Rajasthan. The state wise position of capacity and number of turbines is

shown below.

4.1.1. Madhya Pradesh

There are total 30 units of WEGs located in Dewas, Madhya Pradesh. Out of these 30 units, 28

units are at Rathedi Hills and 2 are at Nagda Hills.

4.1.2. Tamil Nadu

There are total 33 units of WEGs located in Tamil Nadu. Out of these 33 units, 25 units are at

Palladam, 5 units are at Pushpathur and 3 units at Tenkasi.

4.1.3. Rajasthan

There are total 19 units of WEGs located in Jodhpur, Rajasthan. In Jodhpur, 4 units are at Bastwa,

5 units at Ratangarh and rest 10 units are there in Salodi.

4.2. Wind Turbine Configuration and Technical Specifications The Company has used different configuration for wind mills. The details for Wind turbine

technology, state wise is given below:


Madhya Pradesh:

Table 7: Details of WTGs in MP

Description 2.5 MW Madhya

Pradesh

6.4 MW

Madhya

Pradesh

4.8 MW

Madhya

Pradesh

11.2 MW

Madhya

Pradesh

Location Nagda Hills,

Dewas, MP

Rathedi Hills,

Dewas, MP

Rathedi Hills,

Dewas, MP

Rathedi Hills,

Dewas, MP

Commissioning

Year Mar 2006 Mar 2008 July 2008 Mar / Jun 2009

WTG supplier,

Capacity and

no. of units

Suzlon (1.25 MW X

2)

Enercon (0.8 MW

X 8)

Enercon (0.8 MW

X 6)

Enercon (0.8 MW

X 20)

Configuration Rotor Dia: 66 m

Hub Height: 74.5 m

Rotor Dia: 53 m

Hub Height: 73 m

Rotor Dia: 53 m

Hub Height: 73 m

Rotor Dia: 53 m

Hub Height: 73 m

Tamil Nadu:

Table 8: Details of WTGs in TN

Description 6 MW Tamil

Nadu

6 MW Tamil

Nadu

4 MW Tamil

Nadu

4.8 MW Tamil

Nadu

Location Palladam, TN Palladam,

Tenkasi, TN Pushpathur, TN Palladam, TN

Commissioning

Year May 2008 Mar 2008 Feb 2009 Apr 2009

WTG supplier,

Capacity and

no. of units

Suzlon (0.6 MW X

10)

Vestas (0.6 MW X

10)

Enercon (0.8

MW X 5)

Suzlon (0.6 MW

X 8)


Hub Height: 75 m

Rotor Dia: 47 m

Hub Height: 50 m

Rotor Dia: 53 m

Hub Height: 73 m

Rotor Dia: 52 m

Hub Height: 75 m


Rajasthan:

Table 9: Details of WTGs in Rajasthan

Description 7.5 MW Rajasthan 8 MW Rajasthan 6 MW Rajasthan

Location Ratangarh, Jodhpur,

Raj. Salodi, Jodhpur, Raj. Bastwa, Jodhpur, Raj.

Commissioning Year Mar 2008 Sept 2008 Sept 2009

WTG supplier,

Capacity and no. of

units

Suzlon (1.5 MW X 5) Enercon (0.8 MW X

10) Suzlon (1.5 MW X 4)


Hub Height: 78.5 m

Rotor Dia: 53 m

Hub Height: 57 m

Rotor Dia: 82 m

Hub Height: 78.5 m

4.3. Manufacturers/Suppliers’ Credentials & O&M operators

4.3.1. Credentials of Enercon

Enercon (India) Limited, since its inception in 1994 has already installed more than 4100 wind

energy converters in India with a total installed capacity exceeding 2900 MW.

Their wind energy converters are manufactured at four plants in Daman and concrete towers are

manufactured at facilities in Gujarat, Karnataka and Tamil Nadu. They employ over 4,500 people

and have set up the Enercon Training Academy at Daman, for training operations, maintenance

and asset management support teams.

Their windmills generally have rated power of 800KW with rotor diameter of 52.9 m and tower

height of 72‐74 m. Their rotors are upwind type with active pitch control having direction of

rotation as clockwise. The blade material used is Fibreglass (epoxy resin) with integrated

lightning protection.

Enercon is also providing O&M services for their wind turbines.


4.3.2. Credentials of Suzlon

Suzlon Energy Limited (SEL), the flagship company of Suzlon Group, commenced operations in

India in 1995 and is engaged into manufacturing of WTGs. The Group has grown significantly

and provides end‐to‐end solutions in wind energy market in association with its affiliate/ Group

companies.

Suzlon is the world’s third largest wind turbine manufacturer with operations across the

Americas, Asia, Australia and Europe. The Group has presence in over 32 countries in the world.

Suzlon has a fully integrated supply chain system with manufacturing facilities located in India,

China, Belgium and the USA. The company has R&D facilities in Belgium, Denmark, Germany,

India and the Netherlands.

O&M of turbines supplied by Suzlon is taken care by Suzlon itself.

4.3.3. Credentials of Vestas

Vestas Wind Technology India Pvt. Ltd. is a wholly owned subsidiary of Vestas Group, Denmark.

The Vestas group was founded 110 years ago. Vestas entered the wind business in the 1970s, and

manufacturing several models of WTGs with capacity ranging from 660 kW (Model V47) to 3.0

MW (Model V112).

Vestas is the among largest wind turbine manufacturer in the world with 28% market share. The

company operates plants in Denmark, Germany, India, Italy, Britain, Spain, Sweden, Norway,

Australia, China, and Windsor, Colorado. Vestas has installed over 33,500 wind turbines in 63

countries on five continents.

Vestas has been in India since 1997. They have their headquarters in India at Chennai and

production facilities at Chennai and Puducherry. Further they have dedicated R&D center at

Chennai largest after Denmark which employs 300 people. They had over 2400 MW of installed

capacity in the country.


4.4. Details of Off take arrangement

Since the windmills of KS Oils are spread across 4 different states the off take arrangement varies

across the states according to the state policy and pricing framework. The board terms for off take

for the Company are as given below:

Table 10: Off take Agreements Details

State MP (PPA) MP (Captive) TN Rajasthan

Capacity (in MW) 4.8 20.1 20.8 21.5

Offtake Arrangement MP Power Trading Co.

Captive consumption of KS Oils with wheeling charges @ 2%


7.5MW with Ajmer VVNL; 8.0 MW Jaipur VVNL and 6.0 MW with Jodhpur VVNL

Term (years) 20 20 20 20

Tariff (per unit) Rs.4.03,3.86,3.69,3.52 for the first four years and 3.36 remaining yrs

Surplus generation sold at Rs 2.9 to MP Power Trading Co. Ltd

Rs 2.9‐3.39

7.5 and 8 MW‐ Rs 3.52&3.63with escalation of 0.2 paise for 12 year then 0.1 paise for remaining years. For 6 MW Rs 4.28 fix

Payment Credit Period 30 days 30 days 30 days 30 days

Default by State Non‐payment for 90 days

Non‐payment for 90 days by Company



Option with Developer if State Defaults

Terminate and sell in open market or third

party.





Terminate & sell to any third party after

10 years of operations


4.5. Plant Load Factor (PLF) The Net Generation Data (Net of Auxiliary Power consumption) of last four years has been taken

and the turbine wise PLF has been calculated on the units actually billed. The detailed PLF

turbine wise is attached as Annexure II. A snapshot of year wise PLF on cumulative basis is as

under:

2009‐10 2010‐11 2011‐12 2012‐13

Installed Capacity

(MW)

67.2 67.2 67.2 67.2

PLF 22% 19% 20% 22%


5. INVESTMENT RATIONALE

5.1. Opportunity to acquire operational wind assets

The ongoing process of wind asset sale presents an opportunity to invest in the operating wind

power generating assets. The said acquisition will mitigate the risk of installation and

commissioning as the assets are fully operational. Besides, as most of the assets are relatively new

and were commissioned in 2008 and thereafter, the balance life is more than 20 years which is

available for generation.

Moreover, this opportunity enables the buyer to expand its wind power generation portfolio by

67.2 MW in one go.

5.2. Benefit of Accelerated 80% Depreciation

The benefit of accelerated depreciation (80%) may be available to the prospective buyer on the

“Actual Cost” i.e. the cost of the assets to buyer. After the latest Income Tax notification

(Notification No. 15/2012 [F.No. 149/21/2010‐SO (TPL)] S.O 694 (E), dated 30‐03‐2012), the

depreciation is restricted to 15% on wind mills installed after 31‐03‐2012.

Hence, due to earlier installation of the wind mill on sale, the buyer may be able to enjoy

depreciation benefit of 80% which is no longer available on new installation.

Further, benefit of additional depreciation @20% available u/s 32(1)(iia) has been extended to

power generating and distributing companies on installation of new plant and machinery.

Therefore, on new installation by buyer, wind power projects can avail 35% depreciation in the

first year of commissioning and 15% in the subsequent years.

Representations have been made to reintroduce 80% depreciation rate for wind energy assets but

till date no notification has come.


5.3. Assured Power Offtake

As PPAs with State Distribution Companies are in place for most of the power generated, the new

buyer of wind assets will also get the benefit of assured power offtake in case of continuation with

existing PPAs.

5.4. Future Potential / Upside for the Buyer

The project is commanding good revenue stream as of now, but still there are some upsides

which will further improve the cash flows in the hands of buyer.

5.4.1. PPAs Transfer/Termination

In case the PPAs with all three state’s distribution companies are terminated, as per Company’s

information the buyer has the option to sell the power to third party on the applicable industrial

tariff to HT consumer in that state, or the buyer can sell the power to state distribution Company

on the Average Pooled Purchase Cost (APPC). Apart from that, the Company is also currently

using around 20 MW of the capacity in captive use, which will be available to buyer for selling in

the market. Exercising the option to sell power to third party on the applicable HT industrial tariff

may generate additional revenue of approximately Rs 13 Crores (in excess of the revenue

generated from PPA tariff) every year.

Alternatively, the buyer may seek transfer / novation of existing PPAs in its name after obtaining

consent from the relevant counterparties to the PPAs. However, in case of transfer / novation of

PPAs, the benefit of Renewable Energy Certificates shall not be available to the buyer. Further,

the Power Purchase and Wheeling Agreement dated June 09, 2009 entered into between KS Oils

Ltd. and MP Power Trading Company Ltd. for a composite capacity of 7.2 MW includes a total of

9 nos. of WEGs of 800 KW each, out of which only 3 WTGs (being Location Nos. 45, 46 and 53) are

included in the WTG on Sale. Accordingly a carve out for the said 3 WTGs would be required

from the above‐mentioned PPA.


5.4.2. REC Benefit

If the buyer decides to terminate the PPA in all states, and opt for selling power to third party on

mutually agreed price or to state distribution company on the Average Pooled Purchase Cost

(APPC), then the benefit of availing the Renewable Energy Certificates after cooling period of 3

years will also be there. If this option of selling power to third party at mutually agreed price or to

state distribution Company on the Average Pooled Purchase Cost (APPC) is chosen, then there

may be additional benefit every year of approximately Rs 17 Crores (available only after 3 years

of PPA termination) from RECs at presently applicable floor price of Rs. 1500/MWh.

5.4.3. CDM Benefit

Out of total of 67.2 MW, approximately 50% are already registered for issuance of CERs and

remaining 50% are in advanced stages of approval. Madhya Pradesh & Tamil Nadu allows 100%

of CDM benefits to developer in first year and thereafter reducing it by 10% every year till the

sharing becomes 50:50 between the developer and the distribution licensee. In the state of

Rajasthan this sharing is 25:75 between distribution licensee and the developer respectively.

5.4.4. VCU/VER Benefit

Apart from CER, all the projects will be eligible for Voluntary Carbon Unit (VCU)/Voluntary

Emission Reduction (VER). The buyer can claim VCU/VER for previous two years before

approval of the project for CER. As informed by the Company, VER corresponding to 8.5 MW has

already been utilised by them and VER for remaining will be available to the buyer. Therefore the

approved projects for CERs will generate one time additional cash flow o on account of VCUs /

VERs.

5.5. Location Benefit/Important sites

The WEGs are installed at such locations which are one of the most suitable sites for energy

generation through wind in the country. The above mentioned WEGs have the first mover

advantage due to their site locations and will command better generation than the wind farms

which will be installed at other sites.


5.6. Green Energy Initiative


gas emission and consequent changes in climate have resulted in a paradigm shift in the approach

towards development of the clean energy in many countries including India.

The need for adoption of clean technology has been seriously considered by the Government of

India since the Sixth Five Year Plan. Consequently there has been a considerable increase in the

use of renewable energy sources like the wind energy in India’s transition to a sustainable energy

base.

5.6.1. Wind as Renewable Source of Energy

In regions with acute energy shortage, wind energy generated electricity is techno‐economically

viable in view of the very low gestation periods required by wind power plants and its modular

(scalable) installation characteristics as compared to that of conventional power plants. The pace

of development of the wind energy has been accelerated by various promotional policies and

fiscal and tax incentives provided by the State and Central Government. Thus wind energy has a

merit to be included not only in diversified energy portfolio of a company but to general portfolio

of manufacturing.

5.6.2. Renewable Purchase Obligation



renewable energy out of the total consumption in the area of a distribution licensee. National

Action Plan on Climate Change (NAPCC) stipulated a dynamic minimum renewable purchase

target of 5% (of total grid purchase) may be prescribed for 2009‐10 and is estimated to increase by

1% each year for a period of 10 years, thereby reaching 15% by 2020.

In view of the above, there is bright future ahead for the energy generation through wind.


5.6.3. Increasing cost of conventional energy

As the prices of conventional fuel for power generation are increasing day by day, the cost of

power generated through conventional sources is increasing. Therefore investing in renewable

source of power generation is demand of future.

5.6.4. Corporate Social Responsibility

The addition of green energy generation to a company’s portfolio increases the visibility, as the

company is obligating its responsibility towards society. The company can claim wind energy

generation as their initiative towards fulfilling their corporate social responsibility.


6. MARKET SCENARIO

6.1. Introduction The power sector provides one of the most important inputs for the development of a country

and availability of reliable and inexpensive power is critical for its sustainable economic

development. To sustain GDP growth rate of around 8‐10%, it is imperative that the power sector

also grows at the same rate.

The per capita annual consumption of electricity in India is one of the lowest in the world at

approximately 750 kWh, when compared to the estimated per capita annual consumption of over

1,700 kWh in China and nearly 14,200 kWh in the United States of America. In terms of per capita

consumption, India does not rank even in the top 100 countries of the world, whose weighted

average per capita consumption exceeds 5,700 kWh (nearly 8 times India’s per capita

consumption). The low per capita consumption is a result of the low penetration of electricity at

the household level.

Source: CEA, Infraline

6.2. Electricity Demand and Supply Scenario

Despite significant growth in electricity generation over the years, the shortage of power

continues to exist primarily on account of growth in demand for power outstripping the growth

in generation. The all‐India power situation for the last few years is as follows:

Table 11: All India Demand Supply Position

Period Peak Demand (MW)

Peak Deficit (MW)

Peak Deficit (%)

Energy Requirement

(MU)

Energy Deficit (MU)

Energy Deficit(%)

2005‐06 93,255 11,463 12.3 6,31,757 52,735 8.42006‐07 1,00,715 13,897 13.8 6,90,587 66,092 9.62007‐08 1,08,666 18,073 16.6 7,39,343 73,336 9.92008‐09 1,09,809 13,024 11.9 7,77,039 86,001 11.12009‐10 1,19,166 15,157 12.7 8,30,594 83,590 10.12010‐11 1,26,951 1,11,533 12.1 8,76,856 7,84,006 10.62011‐12 1,36,193 1,18,676 12.9 9,33,741 8,37,374 10.3

2012‐13 1,43,355 13,214 9.2 9,98,114 86,905 8.7


Source: CEA

The peaking shortage grew from 12.3% in 2005‐06 to 12.9% in 2011‐12. Further, there is a regional

disparity in the demand‐supply situation across the country which is shown below. The region

wise power position for the year 2013 is as under:

Table 12: Breakup of All India Demand/Supply position for 2012‐13

Source: CEA

As is evident from the above table southern region faces critical power shortages with a peak

deficit of 18.5% and energy deficit of 15.5% as compared to the overall peak deficit of 9.2% and

energy deficit of 8.7% for the country as a whole.

6.3. Renewable Energy


gas emission and consequent changes in climate have resulted in a paradigm shift in the approach

towards development of the clean energy in several countries.

The need for adoption of clean technology has also been seriously considered by the Government

of India since the Sixth Five Year Plan. Consequently there has been a considerable increase in the

use of renewable energy sources like the wind energy in India’s transition to a sustainable energy

base. In regions with acute energy shortage, wind energy generated electricity is techno‐

economically viable in view of the very low gestation periods required by wind power plants and

its modular (scalable) installation characteristics as compared to that of conventional power

plants. The pace of development of the wind energy has been accelerated by various promotional

Region Peak Demand (MW)

Peak Deficit (MW)

Peak Deficit (%)

Energy Requirement

(MU)

Energy Deficit (MU)

Energy Deficit (%)

Northern 45,860 4,070 8.9 3,00,774 27,534 9.2

Western 40,075 589 1.5 2,96,475 9,792 3.3

Southern 38,767 7,181 18.5 2,81,842 43,784 15.5

Eastern 16,655 1,240 7.4 1,07,457 4947 4.6

North Eastern 1,998 134 6.7 11,566 848 7.3

Total 1,43,355 13,214 9.2 9,98,114 86,905 8.7


policies and fiscal and tax incentives provided by the State and Central Government. Thus wind

energy has a merit to be included in diversified energy portfolio.

Most of the capacity addition in the country is envisaged in conventional energy generation

space, primarily thermal. However, in the recent past renewable energy sources have also become

popular due to the clean nature and incentives offered by the Governments. Though renewable

energy capacity generation is typically of lower capacities, it does help in bridging the gap

between the demand and supply of power. Further, it may be noted that as conventional energy

source takes a longer gestation period to match the capacity addition requirement, it opens a huge

opportunity on renewable sources of energy, especially wind energy, which can be commissioned

in few months. Besides being a clean source of energy, any addition in Wind energy capacity will

definitely help in bridging the huge demand‐supply gap in the states.

6.3.1. Provisions of the Electricity Act 2003 on Non‐conventional Energy Sources

Section 86 (1) (e) of the Electricity Act 2003 states that the State Commission shall promote

cogeneration and generation of electricity from renewable sources of energy by providing suitable

measures for connectivity with the grid and sale of electricity to any person, and also specify, for

purchase of electricity from such sources, a percentage of the total consumption of electricity in

the area of a distribution licensee.

Section 61 (h) of the Electricity Act 2003 states that the Appropriate Commission shall, subject to

the provisions of this Act, specify the terms and conditions for determination of tariff and in

doing so shall be guided by the following namely, (h) the promotion of cogeneration and

generation of electricity from renewable sources of energy, (i) the National Electricity Policy and

National Tariff Policy.

6.3.2. Ministry of New and Renewable Energy ‐ Scheme for Implementation of Generation Based Incentives (GBI)

To attract new and large independent power producers and foreign direct investors to wind

power sector, the Ministry of New and Renewable Energy (MNRE) has introduced Generation

Based Incentive (GBI) scheme. Under the scheme, a GBI of Rs 0.50 per unit of electricity fed into

the grid will be provided to wind electricity producers for a period not less than 4 years and a

maximum period of 10 years with a cap of Rs. 62 lakhs per MW per year. This scheme shall be


applicable to maximum capacity limited to 4000 MW during the remaining period of eleventh

five year plan. GBI would be available for wind turbines commissioned after December 17, 2009

and commissioned on or before March 31, 2012.

The GBI scheme would be implemented in parallel with existing fiscal incentive including that of

accelerated depreciation, for grid connected wind power projects in a mutually exclusive manner,

so that companies can avail either accelerated depreciation or GBI, but not both. This incentive

will cover grid connected generation from wind power projects set up for sale of electricity to grid

at a tariff fixed by SERC and/or State Government and also include captive wind power projects,

but exclude third party sale, (viz. merchant power plants). The GBI would be implemented

through Indian Renewable Energy Development Agency (IREDA). The funds provided in the

budget of MNRE will be released upfront as advance to IREDA to ensure timely release and flow

of funds to the projects.

A reading of the National Tariff Policy, National Electricity Policy, the Electricity Act 2003 and

various policies of Ministry of New and Renewable Energy establishes the overwhelming

emphasis on environmental friendly renewable sources of energy such as wind energy.

6.3.3. Renewable Purchase Obligation



renewable energy out of the total consumption in the area of a distribution licensee.

Till January 2011, 26 states have specified targets for the uptake of renewable electricity ranging

from 0.5% to 14%. Some states have also set technology specific targets. With the introduction of

the new Renewable Energy Certificate Scheme, states are looking to fulfil the RPO set by the

Electricity Act through this provision. In the case of failure to comply with the regulation, the

licensees would have to pay penalties to the concerned SERC. These would have to borne by the

licensees in their balance sheets as they would not be allowed to pass on the penalties to

consumers.


6.3.4. Renewable Purchase Obligations across the four states

Table 13: RPOs for Renewable Energy Year Madhya Pradesh Rajasthan Tamil‐Nadu

FY 2011‐12 2.50% 6.00% 10% FY 2012‐13 4.00% 7.10% 10% FY 2013‐14 5.5% 8.2% 10%

Source: As per policy announced by State Electricity Regulatory Commission in the respective State

6.3.5. Sale Options for Renewable Energy Generators

As mentioned above, various government policies promote generation of power from renewable

sources as they are cleaner sources of energy as compared to the conventional coal and gas based

sources of power generation. However, the cost of development of renewable energy projects is

higher than conventional power plant. In order to promote generation from clean technologies

and to attract investments in this field, various incentives are provided to the developers. Further,

to enable the developers to cover the cost of investment with reasonable returns, SEBs permit

purchase of electricity from such projects at a higher price, called as preferential feed in tariff, as

compared to traditional sources of power generation.

Presently, the RE Generators in India have two options, apart from captive usage, for sale of

power generated:

1. Sale at market price to any party

2. Sale at preferential tariff directly to the obligated entities

3. Sale of power/ electricity component at average pooled purchase price to distribution licensee/

at mutually agreed price to third party and sale of environmental attributes (Renewable

Energy Certificates or RECs) separately

Similarly, a power offtaker shall have the above options for purchase of power, which includes

purchase at preferential tariff or purchase at average pooled purchase price or at market

determined price. The purchase at preferential tariff, which typically is at a higher price per unit

as compared to tariff from conventional sources, enables the Distribution Licensee to meet its

RPOs as may be set by the appropriate commission.


In case of purchase of power at average pooled price, the quantum of purchase shall not be

accounted for fulfilment of RPOs, while the Licensee may have to separately purchase RECs from

energy exchange market if required to meet its RPO. The various options are illustrated as under:

6.3.6. Renewable Energy Certificates

Central Electricity Regulatory Commission (CERC) has notified Regulation on Renewable Energy

Certificate (REC) in fulfilment of its mandate to promote renewable sources of energy and

development of market in electricity. It may be understood RE sources are not evenly spread

across different parts of the country. Certain regions have lower potential of RE sources, which

restricts the SERCs of these regions from specifying RPOs. In contrast, certain regions like

Rajasthan and Tamil Nadu have high potential for RE and in such states, there are avenues for

harnessing the RE potential beyond the RPO level fixed by SERCs. However, higher cost of

generation from RE sources discourages the local distribution licensees from purchasing RE

generation beyond the RPO level mandated by the SERCs. The framework of REC is expected to

give push to RE capacity addition in the country, so as to address the mismatch between

availability of RE sources and requirement of obligated entities to meet RPOs.

Figure 1 : Renewable Energy Selling Options

Renewable Generator

Feed-in Tariff (State Regulated

preferential tariff)

Sale to DISCOMs at State Regulated preferential tariff

Sale of Renewable Power

at market price

Sale to third party

REC Option

REC Solar/ Non Solar

Sale of RECs at Power

Exchanges

Sale to DISCOMs at

Price <= APPC

Green attributes

Electricity


Renewable Energy Certificates (RECs) were launched in India on November 19, 2010. The

certificates will enable the RE producer and distributor to engage in trading within a specified

band. This would help those states, where there is little or no wind power potential, in meeting

their RPO obligations.

REC Concept and Mechanism

The traditional mechanism for trade in RE is via state regulated preferential tariff route, wherein

the distribution licensees or obligated entities purchase power from RE sources at preferential

tariffs to fulfil their RPOs. Both, the cost of generation of electricity component and benefits

accrued due to environmental attributes of RE are included in preferential tariff.

In REC mechanism, the electricity component and REC component of the power generated are

unbundled and sold separately. The electricity is sold to open access consumers/ traders/

distribution licensees at last year’s Average Pooled Purchase Cost (APPC) of the State. The REC

component is separately sold to/ bought by obligated entities over the power exchange at market

determined price. The value of one REC has been set at 1 megawatt hour of electricity injected

into the grid from sources of renewable energy. The distribution companies, open access

consumer, captive power plants will have option of purchasing the REC to meet their RPO.

APPC is the weighted average pooled price at which distribution licensee has purchased the

electricity including cost of self generation, if any, in the previous year from all the energy

suppliers long term and short term, but excluding those based on RE sources. Accordingly, under

RE mechanism, the RE generator sells the electricity component to an the distribution licensee at

its weighted average power purchase cost of last year based on non‐RE sources.

CERC, vide its Terms and Conditions for recognition and issuance of REC for RE Generation

Regulations, 2010 has categorised RECs into two types, viz. Solar REC and Non‐Solar RECs. An

entity may be obligated to purchase technology specific RE in order to meet its RPO and

accordingly either Solar or Non‐Solar REC may be utilised. Solar RECs reflect the regulatory

support for the higher cost of solar power generation as compared to other renewable energy

modes.


CERC has laid down the eligibility criteria for RE generators for registration for issuance of

certificates as under:

1. Obtain accreditation from State Agency

2. It does not have any PPA for sale of its capacity at preferential tariff as determined by

appropriate commission

3. It sells electricity generated to any distribution licensee in its area at a price not higher than

APPC or to any open access consumer at a mutually agreed price, or through power exchange

at market determined price

Further, a RE generator who had entered into a PPA at preferential tariff, which has been

terminated, shall not eligible for REC scheme until 3 years from date of termination or till

scheduled date of expiry of agreement, whichever is earlier.

Process for claiming benefits of RECs

For the purpose of claiming benefits of REC, the Company shall have to follow the steps as under:

1. Obtain accreditation from State Agency.

The State Agency shall also intimate the Central Agency (NLDC) and the State Load Dispatch

Centre about successful accreditation of a Project or WTGs

2. Registration with the Central Agency, NLDC

On successful registration, the Central Agency shall intimate the concerned SLDC, State

Agency and the power exchanges.

3. Issuance of REC by NLDC

For the purpose of issuance of RECs, both Solar REC and Non‐Solar RECs, the RE Generator

shall issue an application to the Central Agency. The Company shall also arrange for

submission of a joint meter reading to be submitted to SLDC. The Central Agency shall issue

the RECs on the basis of energy injection report as may be provided by SLDC on the basis of

joint meter readings. On evaluation of the above, NLDC shall issue the permissible RECs to the

RE Generator.

4. Redemption of REC in power exchanges


The RE Generator shall place valid RECs for dealing on any power exchange (either IEX or

PXIL). The trading in RECs generally takes place on last Wednesday of each month on the

designated exchanges. The exchanges shall verify from NLDC about the validity of REC and

determine the market clearing price between the specific floor and forbearance price. The

mechanism for redemption is shown as under:

Figure 2 : Claiming Benefits from REC

Validity of REC

As per order dated 11 Feb 2013 from CERC, the validity of RECs has been extended to 730 from 365 days.

Pricing of REC

The price of a certificate shall be discovered in the power exchanges, viz. Power Exchange India

Limited (PXIL) and Indian Energy Exchange (IEX). Every such certificate will be traded at power

exchanges within a price band (floor price and forbearance price) as decided by CERC from time

to time. CERC in consultation with the Central Agency (Power System Operation Limited) and

Forum of Regulators provide floor price and forbearance prices from time to time.

The determination of floor price and forbearance price is based on:

Power Exchanges

Obligated Entity/ Buyer

Eligible Entity (RE Generator)

Central Agency

Central Agency

Verification of Conditions

Confirmation of REC validity &

quantity

Bid for purchase

Intimation on trade results for

extinguishing RECs Market Clearance (Volume & Price


1. Variation in cost of generation of different RE technologies, either solar or non‐solar, across all

states in the country

2. Variation in APPC across all states

3. Expected RE generation including:

i. Expected RE capacity under preferential tariff

ii. Expected RE capacity under REC mechanism

4. RPOs of different states

The prices are calculated as under:

Forbearance Price = Maximum (Preferential tariff – APPC)

Floor Price = Market equilibrium (minimum reqt. for project viability of RE tech – APPC)

As per the Order dated June 1, 2010 the floor and forbearance prices applicable until FY2012 are

as under:

Table 14: Floor and Forbearance price for RECs till FY2012

Price (Rs./ KWh) Non Solar REC Solar REC

Forbearance Price 3.90 17.00

Floor Price 1.50 12.00

Source: CERC

For the next control period, CERC vide its petition no. 142/2011 dated August 23, 2011 has fixed

the floor and forbearance prices of RECs as given below. These prices are expected to remain

valid till FY2017.

Table 15: Floor and Forbearance price for RECs till FY2017

Price (Rs./ KWh) Non Solar REC Solar REC

Forbearance Price 3.30 13.40

Floor Price 1.50 9.30

Source: CERC


Accordingly, the prices of RECs traded in power exchanges, PXIL and IEX shall be determined

based on prevalent supply‐demand, but shall remain within the above band.

Market Trend for REC trading

RECs are currently traded on last Wednesday of every month on PXIL and IEX. Till date 762 RE

generators have registered under REC mechanism. A summary of all RECs issued and redeemed

in current financial year is as under:

Table 16: Summary of RECs issued till date Month Opening Balance REC Issued REC

Redeemed Closing Balance

Aug 2012 3,98,311 4,74,784 2,74,272 5,98,823Sep 2012 5,98,823 5,69,567 2,65,606 9,02,784Oct 2012 9,02,784 6,15,890 2,24,491 12,94,183Nov 2012 12,94,183 3,94,088 1,33,571 15,54,700Dec 2012 15,54,700 3,83,383 2,74,852 16,63,231Jan 2013 16,63,231 3,07,544 1,95,645 17,75,130Feb 2013 17,75,130 3,16,799 1,55,186 19,36,743Mar 2013 19,36,743 2,71,240 4,31,054 17,76,929Apr 2013 17,76,929 2,61,743 46,676 19,91,996May 2013 19,91,996 2,53,194 54,671 21,90,519June 2013 21,90,519 2,95,730 73,965 24,12,284Jul 2013 24,12,284 4,80,189 1,63,431 27,29,042Total till July 2013 66,73,297 39,44,255 Source: Renewable Energy Certificate Registry of India

All the RECs issued and redeemed in the past one year as indicated above, are related to both

Solar and Non‐Solar technology. Break of Solar and Non Solar RECs issued till date and details on

resumption of RECs are as given below:

Until July 2013 Non Solar Solar Total

RECs Issued 66,32,205 41,092 66,73,297

RECs Redeemed 39,22,814 21,441 39,44,255


The summary of prices of Non Solar REC traded on IEX is as under:

Table 17: Summary of RECs traded on IEX

Month IEX

Volume Traded (REC) Equilibrium Price (Rs./REC) January 2012 1,65,460 3,051February 2012 1,90,482 3,066March 2012 1,92,354 2,900April 2012 62,277 2,201May 2012 1,53,125 2,402June 2012 2,23,164 2,402July, 2012 1,47,369 2,000August 2012 2,48,168 1,500September 2012 2,39,364 1,500October 2012 1,32,231 1,500November 2012 54,976 1,500December 2012 1,73,644 1,500January 2013 13,71,503 1,500February 2013 15,26,114 1,500March 2013 13,08,044 1,500April 2013 12,21,579 1,500May 2013 12,80,605 1,500June 2013 14,01,048 1,500July, 2013 16,76,875 1,500

Source: IEX

It may be observed from the above that REC trading activity has been increasing over the months.

However, the trading price of REC has been consistently been at the floor price. i.e Rs 1500 for the

past one year. Further, the volumes of REC traded have also increased from around 1,65,460 RECs

in Jan 2012 to 16,76,875 RECs in July 2013, which is an increase of almost 10 times of the intial

trading volume. The volumes are expected to increase further considering the stringent RPO

obligations and penalties stipulated by various States in India.


Status of RE Projects Accreditated and Registered

Renewable Energy Certificates were launched in India in November 2010. A summary of various

projects accreditated by State Agencies and registered by NLDC till August 2, 2013 for claiming

REC benefits are as under:

Table 18: REC Accreditations and Registrations

S.No Source Accreditation Registration Capacity (MW)

Projects Capacity (MW)

Projects

1 Wind 2205.58 565 2038.04 533 2 Urban or Municipal Waste 16 2 0 0 3 Solar Thermal 3 1 0 0 4 Solar PV 166.68 82 157.68 77 5 Small Hydro 218 25 187.5 22 6 Others 1.67 1 1.67 1 7 Geothermal 0 0 0 0 8 Biomass 639.9 65 582.85 60 9 Bio-fuel cogeneration 777.87 79 667.3 69 Total 4028.69 820 3635.03 762

Source: Renewable Energy Certificate Registry

6.3.7. Clean Development Mechanism Benefits

In India, a promoter of wind energy is entitled to secure the benefits of Clean Development

Mechanism (CDM) along with the respective distribution licensee. Various models have been

proposed by several State Commissions for the sharing of the CDM benefits between the

promoter and the distribution licensee.

Since the proposed Generation project shall be operating on clean fuel of wind power, it would be

entitled to qualify as a CDM Project and hence eligible for earning CERs. The following is a brief

note on CDM framework and its benefits:

Background of CDM and its Framework

The 1997 Kyoto Protocol to the United Nations’ Framework Convention on Climate Change

(UNFCCC) resolved to reduce emission levels of greenhouse gases (GHGs).


Six GHGs have been identified, which are responsible for increasing atmospheric temperature

causing ‘Global Warming’. Carbon dioxide (CO2), one of the major gaseous emissions from

thermal Power Plants is also included in the category of the GHGs. By and large, the project

activities that reduce the emission of these GHGs qualify to claim emission reductions under

various mechanisms of Kyoto Protocol. Flexible market mechanisms in the Kyoto Protocol, such

as the ‘Clean Development Mechanism’ (CDM), allow industrialized countries (the ‘Annex‐B

countries’ of the Protocol) with emission reduction commitments to procure Certified Emission

Reduction (CERs) from eco‐friendly, development‐oriented projects and activities, which reduce

GHG emissions, also known as ‘CDM projects’.

GoI signed and ratified the Kyoto Protocol in August, 2002. As per the provisions in the Protocol,

the Indian Government has formed the Designated National Authority (DNA), to endorse CDM

projects, which meet the sustainability criteria set by the GoI. The Executive Board (EB) of

UNFCCC has also accredited several agencies to function as Designated Operational Entity

(DOE) for project validation and verification.

Approval process for project registration and CER issuance

The approval process for the CDM projects is a step‐wise approach as under:

1. Identification of project; 2. CDM documentations, Project Concept Notes (PCN) and Project Design Documentation

(PDD); 3. Host country approval by DNA at the MoEF; 4. Validation by DOE; 5. Registration of CDM project by CDM‐EB; 6. Monitoring as per monitoring plan mentioned in the PDD; 7. Verification and Certification by DOE; and 8. Issuance of CER by CDM‐EB.


A typical CDM project cycle is depicted schematically below:

Figure 3 : Process for CER issuance

Past price trend in CER trading is as given below:

Year Average Price (In Rs) (Based on Daily Closing Prices) 2011‐ 12 3.89 2010‐11 9.94 2009‐ 10 12.52 2008‐09 11.90 2007‐08 17.06

Source: BlueNext Exchange

6.3.8. Installed Capacity of Renewable Energy In India (in MW)

(in MW) Dec-05

Jan-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Wind Power 4,434 6,315 8,757 10,243 11,807 14,156 17,353 19,051 Small Hydro Power (up to 25 MW) 1,748 1,905 2,180 2,430 2,735 2,955 3,395 3,632

Cogeneration-bagasse 491 602 800 1,049 1,334 1,666 1,985 2,337

Biomass Power (Agro residues) 377 510 606 703 866 999 1,150 1,265

Solar Power 2 2 2 2 10 20 941 1,686

Source: CRISIL Research

About 68% of the total energy generated from renewable resources comes from Wind Energy.


6.4. Wind Power Scenario in India

The Indian wind energy sector has been growing rapidly in the past few years. Government’s

initiative such as tax exemptions and subsidies has contributed in phenomenal growth of this

sector. Wind power (19 GW) constituted 9% per cent of the all India installed capacity (212 GW)

in 2012‐13. However, its share in renewable energy is the highest at 68 per cent as of March 2013.

The wind energy potential in India as estimated by MNRE is more than 48,000 MW.

WTG capacity addition in India has taken place at a CAGR of 38.5% for the period of 1992‐2010.

The installed capacity increased from a modest base of 41.3 MW in 1992 to reach 18,551 MW by

Feb 2013. The following is the installed capacity of wind power in different States as on Feb 2,

2013.

Table 19: State Wise Wind Installed Capacity upto 31.02.2013 State Potential (MW) Installed Capacity

(MW) % to the Total Wind Power Installed in India

Andhra Pradesh 8968 435 2%Gujarat 10645 3093 17%Karnataka 11531 2113 11%Kerala 1171 35 0%Madhya Pradesh 1019 386 2%Maharashtra 4584 2976 16%Rajasthan 4858 2355 13%Tamil Nadu 5530 7154 39%Orissa 255 ‐ 0%Others ‐ 4 0.02%Total 48561 18551 100%

Source: C- WET, Ministry of new and renewable energy

It may be observed from the above that Tamil Nadu ranks the highest in terms of wind energy

generation capacity followed by Gujarat and Maharashtra.

As per the study of Centre for Wind Energy Technology (CWET), large areas in India have annual

wind power densities of more than 200 Watts/m2 at 50m above ground level. This is considered to

be a benchmark criterion for establishing wind farms as per CWET and MNRE. The wind power

density map from Indian Wind Atlas (2010) is given below.


Source: Centre for Wind Energy Technology (C‐WET)

Figure 4 : Wind Power Density map of India

From above, it may be observed that the highest wind power potential exists in the states of Tamil

Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat and Rajasthan.

6.5. Government and regulatory structure for Power in India

The national and state governments in India both have the power to legislate on electricity supply

(except for nuclear power, which is in the domain of the national government.)


Main authorities

• Renewable energy is promoted by the Ministry of New and Renewable Energy (MNRE), the

central authority for all policies, regulations and approvals relating to renewable energy.

• It is supported by the Ministry of Power and the Central and State Electricity Regulatory

Commissions (CERC and SERCs). CERC deals with the national grid and inter‐state

transfer/trading of power, while SERCs manage regional distribution and transmissions. They

play a key role in the promotion of renewable energy as they have the sole authority to ascertain

the feed‐in tariffs and other policy matters, such as the Renewable Portfolio Standard (RPS).

• Energy Development Agencies (EDAs) represent the MNRE at the state level. Their main

purpose is to assess and promote renewable energy frameworks for individual states, and to

advise the MNRE, state governments and SERCs.

• The Indian Renewable Energy Development Agency (IREDA) promotes financial assistance for

renewable energy and energy efficiency projects in India.

Secondary stakeholders

• The Ministry of Finance (MoF) controls the government’s budget.

• The Planning Commission is responsible for balancing specific policies and objectives against

national priorities and resources. This includes allocating funds to policies such as Generation‐

Based Initiatives.

• The Ministry of Environment and Forest (MoEF) manages environmental (and forestry)

programmes. The use of forest land for wind energy projects has to be approved by the MoEF.

6.6. Regulations and Incentives for Renewable Energy

The Central government has formulated various policies and incentives for the promotion of

renewable energy sources. This has spurred the development of wind energy by allowing it to

compete with other conventional sources of electricity.

The major incentives provided by the Central government are‐


• Ten‐year tax holiday – Wind power project are exempt from income tax on all earnings

generated from the project for any single 10 year period during the first 15 years of the

project’s life.

• 80 per cent accelerated depreciation in the first year of installation –Investors might be

able to take advantage of accelerated depreciation of upto 80% of the project cost if the

project is commissioned before 30 September of the financial year, or 40% if the project is

commissioned before 1 March of the financial year. However, this benefit is not applicable

to WTGs commissioned after 31.03.2012, as per the latest amendment in Income Tax Laws.

• Generation based incentive of Rs. 0.5/kWh

• Excise duty relief

• Import of wind electric generators under general license and duty free import of selected

spares

6.7. Incentives provided by state governments

Growth in domestic wind power as also been driven by financial incentives and favorable state

policies in the form of assured power off‐take and preferential feed‐in‐tariffs. Tamil Nadu leads

the country with 7154 MW of cumulative installed capacity, followed by Gujarat and Maharashtra

with 3093 MW and 2976 MW respectively.

6.8. Regulations and Incentives for Renewable Energy in MP

6.8.1. M.P. Electricity Regulatory Commission Tariff Order for procurement of power from Wind Electric Generators ‐ November 2007

Wind Power Tariff

It has been specified in this Regulation that the tariff determined by the Commission shall be

applicable for a period of twenty years and the control period may be three years.


The Commission sets the tariff for generation from 1MW of new wind energy project to be

commissioned after 21st, November 2007 till the close of FY 2011‐12. Project life would be

considered to be 20 years and the tariff details are as follows:

Year 1 – 4.03 Rs/unit




Year 5 – 20 – 3.36 Rs/unit

Tariff for existing WTGs would be as follows:

Table 20: Tariff Details in MP

S.No Parameter Price per unit

1

Commissioned before 11.06.2004 and whose agreement period

is not over As per Agreement in force

2

Commissioned before 11.06.2004 and whose agreement period

is over and want to continue to supply to Discoms for

remaining life of the project Rs 2.87 per unit

3

Commissioned on 11.06.2004 or later and who have executed

an agreement with the Discom As per Agreement in force

4

Commissioned on 11.06.2004 or thereafter but prior to the date

of issue of this order and who want to supply to Discom now

after supplying to third part/captive use for some years

Based on yearly tarrif fixed by

order dated 01.03.2006 on the

basis of number of years lapsed

from the date of commissioning

of the unit

5

Inadvertent flow of energy into the system either by captive

user or third party supplier (for those commissioned after

11.06.2004) Rs 2.9 per unit

Wheeling Charges

Wheeling charges and applicable surcharge to be levied as determined by the Commission from

time to time for third part sale/captive consumption. Wheeling charges to be payable to Discom

where energy is consumed irrespective of the point of injection.


The latest order from M.P. Electricity Regulatory Commission released during March 2013 has set

new tariffs for wind mills installed between 01.04.2013 till 31.03.2016. The new tariff order will be

applicable for projects installed during the above mentioned control period for a project life of 25

years. The Commission sets the levelised tariff @ Rs.5.92 per unit for generation from new wind

energy projects to be commissioned after issue of this order for its project life of 25 years.

6.8.2. Regulations and Incentives for Renewable Energy in TN

Power Procurement from New and Renewable Energy Sources of Energy Regulations, 2008

Section 61 of the Electricity Act 2003 (Central Act 36 of 2003) stipulates that the State Electricity

Regulatory Commission shall specify the terms and conditions for the determination of tariff. In

accordance with the above stipulation, the Tamil Nadu Electricity Regulatory Commission

notified the “Power Procurement from New and Renewable Sources of Energy Regulations 2008”

on February 08, 2008. It has been specified in this Regulation that the tariff determined by the

Commission shall be applicable for a period of twenty years and the control period may be three

years.

TNERC – Comprehensive Tariff Order on Wind Energy dated March 20, 2009

Renewable Purchase Obligations (RPO)

The Commission has fixed the Renewable Purchase Obligation (RPO) at minimum of 13% for

2009‐10 and minimum of 14% for 2010‐11. The notification dated 19 May 2013 has fixed the RPO

at 10% from FY 2012 to FY 2014.

Clean Development Mechanism (CDM) Benefits

In India, a promoter of wind energy is entitled to secure the benefits of Clean Development

Mechanism along with the respective distribution licensee. Various models have been proposed

by several State Commissions for the sharing of the CDM benefits between the promoter and the

distribution licensee. In Tamil Nadu, CDM benefits should be shared on gross basis starting from

100% to developers in the first year and thereafter reducing by 10% every year till the sharing

becomes equal 50:50 between the developer and the consumer in the sixth year. Thereafter, the


sharing of CDM benefits will remain equal till such time the benefits accrue. This formula for the

sharing of the CDM benefits has been accepted by the TNERC in its tariff order.

Wind Power Tariff

In its Comprehensive Tariff Order on Wind Energy dated July 31, 2012, TNERC has fixed the

tariff for wind mills commissioned after 1.08.2012 to 31.07.2014 for a period of 20 years of project

life. The tariff for all wind mills commissioned during the above mentioned control period has

been fixed at Rs. 3.51 per unit for 20 years of project life.

In its previous Comprehensive Tariff Order on Wind Energy dated March 20, 2009, TNERC has

fixed the tariff for wind mills commissioned after March 31, 2009 at Rs 3.39 per kWh. The wind

mills commissioned between September 19, 2008 and March 19, 2009 shall be eligible for a tariff of

Rs 3.24 per unit from March 20, 2009 to March 31, 2009 and Rs 3.39 per unit from April 01,

2009.The wind mills commissioned between May 15, 2006 and September 18, 2008 shall be eligible

for a tariff of Rs 2.90 per unit. The wind mills commissioned prior to May 15, 2006 shall be eligible

for a tariff of Rs 2.75 per unit. It may be observed that tariff has been consistently increased to

keep in pace with the growing input costs so that the margins of the wind power developers are

not impacted adversely. This is in line with its policy to encourage and promote wind power

developers in the State.

6.9. Regulations and Incentives for Renewable Energy in Rajasthan

6.9.1. Rajasthan Electricity Regulatory Commission order dated 17.05.2013

Under the latest order dated 17 May 2013, revised tariff for wind power plants commissioned

during FY 2013‐14 has been fixed for a period of 25 years of project life. The tariff has been fixed

based on location of the wind mill in Rajasthan and whether the higher deprecation benefit of

additional 20% is being availed in the first year of project in addition to the allowed 15%. Details

of tariff are as given below:


Table 21: Tariff Details in Rajasthan for FY 2013‐14

Tariff if higher depreciation benefit is not availed

Tariff if higher depreciation benefit is not availed

Jaisalmer, Barmer and Jodhpur Districts

Rs 5.46 per unit Rs 5.12 per unit

Other Districts Rs 5.73 per unit Rs 5.38 per unit

6.9.2. Rajasthan Electricity Regulatory Commission – Commission order No.15 – December 2011

Wind Power Tariff

Under the policy revised tariff for wind power plants commissioned during FY 2010‐11 and FY

2011‐12 for a period of 20 years is as follows:

Table 22: Tariff Details in Rajasthan FY Jaisalmer, Barmer and Jodhpur Districts Other Districts

2010‐11 Rs 4.10 per unit Rs 4.31per unit

2011‐12 Rs 4.46 per unit Rs 4.69 per unit

Tariff details based on order dated 09.03.2007 for WTGs commissioned between 31.03.2007 and

31.03.2010 for 20 years is as follows:

Year of operation Jaisalmer, Barmer, Jodhpur Distts.

(In Rs) Other Distts (In Rs) EHV 33/11 KV EHV 33/11 KV 1 3.59 3.48 3.67 3.56 2 3.61 3.5 3.71 3.6 3 3.63 3.52 3.75 3.64 4 3.65 3.54 3.79 3.68 5 3.67 3.56 3.83 3.72 6 3.69 3.58 3.87 3.76 7 3.71 3.6 3.91 3.8 8 3.73 3.62 3.95 3.84 9 3.75 3.64 3.99 3.88 10 3.77 3.66 4.03 3.92 11 3.79 3.68 4.04 3.93 12 3.81 3.7 4.05 3.94 13 3.82 3.71 4.06 3.95


Year of operation Jaisalmer, Barmer, Jodhpur Distts.

(In Rs) Other Distts (In Rs) EHV 33/11 KV EHV 33/11 KV 14 3.83 3.72 4.07 3.96 15 3.84 3.73 4.08 3.97 16 3.85 3.74 4.09 3.98 17 3.86 3.75 4.1 3.99 18 3.87 3.76 4.11 4 19 3.88 3.77 4.12 4.01 20 3.89 3.78 4.13 4.02

Levelised 3.71 3.6 3.89 3.78

Subsequent revision of tariff in order “Tariff for Wind Project as per RERC” dated 16.07.2009 has

provided the following rates for windmills commissioned during FY 2009‐10 for a period of 20

years.

Jaisalmer, Barmer and Jodhpur Districts (In Rs) Other Districts (In Rs) Escalation

4.28 4.5 Fixed


7. CONTRACTUAL AGREEMENTS

7.1. Land Details Land required for setting up WTGs have been either purchased or leased. In Tamil Nadu, land

has been acquired/ purchased for setting up of WTGs. In other sites like Rajasthan and Madhya

Pradesh land is on lease basis. The land details statewise are as given below:

Madhya Pradesh

There are total of 30 WTGs located in Madhya Pradesh, of which 28 were supplied by Enercon

and 2 by Suzlon.

Enercon land Arrangement:

• Land was initially leased by Enercon and later transferred in the name of KS oils for a one‐

time payment of Rs 30,000 /MW.

• The lease deed is signed for a period of 20 years with the Madhya Pradesh Forest

Department. These lease agreements defines the Transferee broadly including KS oils

successors in office and permitted assigns.

Suzlon land Arrangement:

• Land for KS oils Suzlon machines in MP is directly leased from MP Forest Department for

a period of 30 years. The Suzlon machines lease agreements defines the Lessee broadly

including KS oils heirs, executors, administrators, legal representatives and assigns.

WTG wise detailed information on the area of land leased, Lease start date etc is provided in

Annexure I.

Tamil Nadu

There are a total of 33 WTGs in Tamil Nadu and land for all WTGs in Tamil had been purchased.

Approximately 68 acres of land was purchased for setting up the WTGs for a total consideration

of 1.5 Crores (Approx) during the period FY 2007‐08 and FY 2008‐09. Detailed information on

land purchased for setting up each WTG, its location and purchase value are given in Annexure I.


Rajasthan

There are 19 WTGs in Rajasthan. All WTGs have been set up on land sub leased from the WTG

supplier. The suppliers have leased the land initially from the Government of Rajasthan and then

subleased it to KS oils. For WTGs supplied by Suzlon, lease rent will be paid as per the prescribed

rate per year decided by the Government of Rajasthan while for all Enercon machines, the lease

rent is fixed at Rs 92,775 per year. The sub lessee holds right to assign or to mortgage the sub lease

to banks/FIs.

Land lease details for each WTG is provided in Annexure I.

7.2. Power Purchase Agreements

The company has entered into Power Purchase Agreement (PPA) with the respective state

Electricity Boards to ensure evacuation of power. Of the 67.2 MW power generated

20.1 MW is used as captive to KS Oils. This capacity gives the opportunity to go for third party

sales.

Details of PPA entered are as follows:

Madhya Pradesh

• PPA is valid for 20 years from the Date of Commissioning

• Wheeling agreement is will be in force for 5 years from Date of Commissioning and may

be renewed for further usage.

Table 23: PPAs in MP

Project Capaci

ty (MW)

PPA Signatory

Date of Commissioning

Current Tariff as

per PPA(in Rs per unit)

Escalation in Tariff (In Rs)

Suzlon M.P. 2.5 M.P Power Trading Co.

Ltd

31 Mar 06 Wheeling Excess generation

@2.25/unit

Enercon MP 4.8 M.P Power Trading Co.

Ltd

2.4 MW – 24 Jun 08 1.6 MW – 21 Jul 08 .8 MW – 08 Aug 08

3.52 Rs 4.03,3.86,3.69,3.52 & 3.36 for remaining year


Project Capaci

ty (MW)

PPA Signatory


Current Tariff as




Ltd

5.6 MW – 30 Mar 08 0.8 MW – 29 Mar 08 Wheeling Excess generation

@2.9/unit


Ltd

2.4 MW – 26Mar 09* 4.8 MW – 10 Jun 09 4 MW – 29 Jun 09

Wheeling Excess generation @2.9/unit

*This capacity pertains to the Power Purchase and Wheeling Agreement dated June 09, 2009 entered into between KS Oils Ltd. and MP Power Trading Company Ltd. for a composite capacity of 7.2 MW includes a total of 9 nos. of WEGs of 800 KW each, out of which only 3 WTGs (being Location Nos. 45, 46 and 53) are included in the WTG on Sale. Accordingly a carve out for the said capacity of 2.4 MW (3 WTGs) would be required from the above‐mentioned PPA, after obtaining relevant approvals.

Tamil Nadu:

• PPA is valid for 20 years from date of commissioning

• Reactive power charges:

o For drawing reactive power upto 10% of the net energy generated – 25 paise per

KVarh

o For drawing reactive power more than 10% of the net energy generated – 50 paise

per KVarh for the entire reactive power drawl.

Table 24: PPAs in TN

Project Capaci

ty (MW)

PPA Signatory


Current Tariff as



Suzlon TN 6


2.4 MW – 31 Mar 08 0.6 MW- 17 Apr 08 0.6 MW- 23 Mar 08 1.2 MW- 26 Mar 08 0.6 MW- 17 May 08 0.6 MW- 15 May 08

2.9 Fixed

Vestas TN 6 Tamil Nadu Electricity Board

3 MW – 31 Mar 08 2.4 MW- 29 Mar 08 0.6 MW- 27 Mar 08 2.9 Fixed

Enercon TN 4 Tamil Nadu Electricity Board

0.8 MW- 30 Sep 08 0.8 MW – 23 Oct 08 0.8 MW – 19 Dec 08 1.6 MW- 21 Feb 09

2.9 Fixed

Suzlon TN 4.8 Tamil Nadu Electricity Board

2.4 MW – 22 Apr 09 2.4 MW- 30 Apr 09 3.39 Fixed


Rajasthan:

• PPA is valid for 20 years from date of commissioning

Table 25: PPAs in Rajasthan

Project Capacity (MW)

PPA Signatory


Current Tariff as



Suzlon Rajasthan

7.5

Ajmer Vidyut Vitran Nigam

Ltd

31 Mar 08 3.54


Enercon Rajasthan

8

Jaipur Vidyut Vitran Nigam

Limited

6.4 MW – 26 Sep 08 1.6 MW 30 Sep 08

3.65


Suzlon Rajasthan

6 Jaipur Vidyut Vitran Nigam

Limited

3 MW – 25 Sep 09 1.5 MW- 29 Sep 09

1.5 MW – 07 Nov 09 4.28 Fixed

7.3. O & M Contracts KS Oils has entered into an O&M arrangement mostly with the suppliers of WTGs. The brief

provisions of the O&M arrangement with annual charges and warranties are given below:

7.3.1. O&M agreements signed with Suzlon for 26.8 MW

Operation and Maintenance service agreements have been signed with Suzlon Infrastructure

Services Limited (SISL) for 26.8 MW of capacity for 20 years. The O&M agreements are effective

from the date of commissioning of the WTGs.

Table 26: O&M agreement with Suzlon

Region Total Capacity (MW)

WTG Type (MW)

No of WTGs

Operation Services Charge

(Rs)

Maintenance Charge (Rs)

Free O&M (Years)

O&M charges applicable from FY

Rajasthan‐I 7.5 1.50 5 6,75,000 8,75,000 1 2009‐10

Rajasthan ‐II 6 1.5 4 6,75,000 8,25,000 2 2011‐12

MP 2.5 1.25 2 4,72,500 5,77,500 3 2009‐10

TN ‐ I 6 0.6 10 2,45,000

2,55,000 1 2009‐10


Region Total Capacity (MW)

WTG Type (MW)

No of WTGs

Operation Services Charge

(Rs)

Maintenance Charge (Rs)

Free O&M (Years)


TN ‐ II 4.8 0.6 8 2,94,000 3,06,000 1 2009‐10

• The above charges are valid upto 10 years from the date of agreement. From 11th year onwards till 20th year, the charges shall be as per mutual agreement at the end of 10th year.

• Charges given above are excluding Service tax, Works Contract tax, Education Cess and/or any other Government taxes, duties, levies, which would be paid along with O&M Service charges from time to time.

• Escalation of 5% per annum for both operation services and maintenance charges

• Failure to pay service charges on or before due date would attract an interest rate of 18% p.a on the unpaid amount

Warranties:

• Machine Availability: A combined machine availability of 95% for all WTGs put together

under each O&M Agreement. In case the annual average machine availability falls below

95%, then SISL shall compensate an amount equal to 2% of the annual O&M service

charge for every 1% shortfall below the 95% of average machine availability subject to a

maximum of 10% of the annual O&M charges.

• Reactive Power: Reactive power drawn cumulatively by the WTG annually shall not

exceed 5% of the total generation of Power by the WTG. SISL would compensate for any

excess reactive power drawn as per charges specified by SEB subject to a maximum of 10%

of O&M charges.

• Transmission losses: Loss of power during transmission between the WTG meter and the

SEB/SEB authorized meter(s) located within the Wind Farm shall not be more than 5%. For

every 1% of excess loss company will be compensated with 2% of annual charges subject

to a maximum of 10% of O&M charges.

• Limitation on liability: Liability of the O&M provider has been capped at 25% of O&M

charges for the year for all the warranties mentioned above.


7.3.2. O&M agreements signed with Enercon for 34.4 MW Operation service agreements maintenance agreements have been signed with Enercon India

Limited (EIL) for 34.4 MW of capacity. The O&M agreements are effective from the date of

commissioning of the WTGs.The Tenure of agreements is 10 years with possibility to renegotiate

at the end of term.

Table 27: O&M agreement with Enercon

State Total

Capacity (MW)

WTG Type (MW)

No of WTGs

Operation Services

Charge (INR / WTG)

Maintenance Charge (INR / WTG)

Free O&M (Years)


Rajasthan 8 0.8 10 3,50,000 1,50,000 1 2009‐10

MP‐I 11.2 0.8 14 3,50,000 1,50,000 1 2010‐11

MP‐II 11.2 0.8 14 3,50,000 1,50,000 1 2009‐10

Tamil Nadu

4 0.8 5 3,50,000 1,50,000 1 2009‐10

• Escalation of 5% per annum for both operation services and maintenance charges.

• Service tax would be extra to the prevailing operation and maintenance charges @ 10.3%.

Warranties:

• Wind farm availability: To provide annual machine availability for entire wind farm of

95%. In case of shortfall in availability Enercon will compensate for proportionate loss of

generation as per prevailing PPA rate.

7.3.3. O&M agreements signed with Third Party for 6 MW O&M arrangements for 6 MW capacity (Number of units: 10 WTGs) by Vestas in Tamil Nadu

have been outsourced to a third party operator (I‐Fox Renewables and Infra Pvt Ltd.) The

contract with I‐ Fox Renewables and Infra Pvt Ltd has been signed on 01 Oct 2012 and is valid for

a period of 3 years. The cost for O&M is fixed @ Rs 4,20,00 per annum (Service Tax additional)

with an escalation of 5% year on year.


8. TRANSACTION STRUCTURE

8.1. Debt Outstanding The Company has availed Term Loan facilities from various lenders for setting up of the

aforementioned assets. As mentioned earlier, it is proposed to sell off the non‐core assets of the

company like Wind Energy business of KS Oils Ltd to bring in the required liquidity and reduce

debt. The lender wise outstanding debt obligation of the Company pertaining to wind mill assets

as on Cut Off Date (CoD) i.e July 1st, 2011 is given below.

Table 28: Debt Outstanding position

(Rs. Crores)

Lender Balance O/s as on CoD

SBI 39.99Phoenix ARC 17.18CBI 76.53IDBI 33.93Total 167.63

The total debt obligation which is to be repaid will be more than the above mentioned amount

due to accumulation of interest after CoD.

8.2. Security charge over assets The Company has given exclusive first charge over wind mill assets to SBI, Phoenix ARC

(assignee of Axis Bank Ltd), CBI, and IDBI. The turbine wise detail of the first charge with their

respective lender is given as Annexure III.

8.3. Mode of Transaction As of now, it is proposed that the sale of wind mill assets will be considered on slump sale basis.

Slump sale has been defined in section 2(42C) of the Income‐tax Act. It means transfer of one or

more of the undertaking as a whole as a result of the sale for a lump sum consideration.

It has been understood that the benefit of accelerated depreciation (80%) may be available to the

prospective buyer on the “Actual Cost” (Cost of assets in the hands of buyer), even after the

Income Tax fourth amendment rule, 2012. The aforementioned amendment restricts depreciation


to 15% on wind mills installed after March 31st, 2012. The extract of the opinion is annexed as

Annexure IV.

The benefit of unused 80 IA may not be transferred to the prospective buyer in this case.

The prospective bidders are requested to give their quote which they think is the net amount

payable on a cash and debt free basis and assuming zero working capital. For the purpose of the

bid, bidders are advised to assume that there are no current asset or current liability along with

the wind energy undertaking and all other statutory cost implications like stamp duty are to be

borne by the bidders themselves.


9. CONCLUSION

In view of the aforementioned details about the wind energy assets provided in the Information

Memorandum, this is an excellent opportunity to invest in wind energy generation business.It is

emphasised that decision to buy the said assets is judicious based on the following facts;

This opportunity instantly enables the buyer to expand its wind power generation portfolio by 67.2 MW.

There is no risk of installation and commissioning as the assets are fully operational.

Assets are relatively new. The balance life is more than 20 years which is available for generation.

The benefit of accelerated depreciation (80%) may be available to the prospective buyer on the “Actual Cost”.

Benefits related with renewable energy development like RECs and CDM benefits, are available.

Assets are located at most suitable sites for energy generation through wind.

Energy generation through wind is renewable source of energy, which is having bright future ahead on account of ‐ increasing cost of conventional energy, renewable purchase obligations, and other factors associated with green energy.

Other features like, flexibility to continue with the assured long term PPAs or to sell power to

third party, technical specifications of assets, O&M arrangement, etc. are the additional benefits

which will elate the potential buyer.

The present IM is meant for circulating the factual and required information among the potential

buyers, which will help them to appreciate the assets proposed for sale. However, the potential

buyers are advised to carry out their own due diligence and valuation exercise before bidding for

the same.

Contact details of SBICAP officials are provided as Annexure V for any clarifications.


Annexure – I Land Details for WTGs in Madhya Pradesh

Machine No. Supplier Area o f Land

Lease start Date Lease Period Address

N ‐13 Suzlon 0.35ha 4‐Apr‐06 30 Village: Nagda, District :Dewas

N ‐16 Suzlon 0.35ha 4‐Apr‐06 30 Village: Nagda, District :Dewas

LOC‐9 Enercon 0.09ha 20‐Mar‐08 20 Dewas Forest Range, Tehsil Dewas &Bagli








LOC‐39 Enercon 0.09ha 24‐Jun‐08 20 Dewas Forest Range, Tehsil Dewas &Bagli



LOC‐42 Enercon 0.09ha 21‐Jul‐08 20 Dewas Forest Range, Tehsil Dewas &Bagli

LOC‐43 Enercon 0.09ha 21‐Jul‐08 20 Dewas Forest Range, Tehsil Dewas &Bagli

LOC‐44 Enercon 0.09ha 8‐Aug‐08 20 Dewas Forest Range, Tehsil Dewas &Bagli










Loc‐63 Enercon 0.09ha 10‐Jun‐09 20 Dewas Forest Range, Tehsil Dewas &Bagli








Land Details for WTGs in Tamil Nadu

Machine No. Supplier

Area of Land (Acres)

Land Purchase Value(In Rs)

Land Purchase Date

Address

E ‐772 Suzlon 1.2 557,750 25‐Feb‐08 Elavanthi Village, Tirpur Taluk, Coimbatore Dist



E ‐085 Suzlon 1.2 470,450 12‐Feb‐08 Kallipalayam Village, Tirpur Taluk, Coimbatore Dist

E ‐743 Suzlon 1.2 536,895 12‐Feb‐08

Kallipalayam Village, Tirpur Taluk, Coimbatore Dist

E ‐744 Suzlon 1.2 518,950 12‐Feb‐08


E ‐764 Suzlon 1.2 493,730 12‐Feb‐08


PS‐385 Vestas 1.27 688,100 3‐Mar‐08


PS‐472 Vestas 1.9 746,000 11‐Mar‐08


PS‐473 Vestas 1.4 500,100 5‐Mar‐08


PS‐474 Vestas 1.8 785,300 11‐Mar‐08 Kallipalayam Village, Tirpur Taluk, Coimbatore Dist

PS‐475 Vestas 2 785,300 7‐Mar‐08 Kallipalayam Village, Tirpur Taluk, Coimbatore Dist


Machine No. Supplier

Area of Land (Acres)

Land Purchase Value(In Rs)

Land Purchase Date

Address

PS‐512 Vestas 2 785,300 11‐Mar‐08


E ‐742 Suzlon 1.2 536,895 12‐Feb‐08


E ‐737 Suzlon 1.2 455,900 8‐Feb‐08

Kattur Village, Tirupur Taluk, Coimbatore Dist

EL ‐173 Suzlon 1.2 424,375 12‐Feb‐09


E ‐794 Suzlon 1.2 499,550 12‐Feb‐09


EL ‐165 Suzlon 1.2 526,225 12‐Feb‐09


EL ‐079 Suzlon 1.2 485,000 4‐Feb‐09

Kokkampalayam Village, Dharapuram Taluk, Erode

EL ‐122 Suzlon 1.2 485,000 13‐Feb‐09


EL ‐171 Suzlon 1.2 497,125 13‐Feb‐09


EL ‐128 Suzlon 1.2 543,200 4‐Feb‐09


EL ‐127 Suzlon 1.2 441,350 13‐Feb‐09 Kokkampalayam Village, Dharapuram Taluk, Erode

7786 Enercon 2.5 200,000 23‐Sep‐08 Kottathurai Village, Palani Taluk, Dindugal Dist

7797 Enercon 2.5 200,000 7‐Jan‐09 Kolumankondam Village, Palani Taluk, Dindugal Dist

PS‐327 Vestas 1.15 120,280 29‐Feb‐08

Kulasekaramangalam Village, Sankarankovil Taluk, Tirunelveli Dist

PS‐328 Vestas 1.36 109,740 29‐Feb‐08


PS‐480 Vestas 2 200,475 29‐Feb‐08


PS‐510 Vestas 2 785,300 11‐Mar‐08

Madhapur Village, Tirpur Taluk, Coimbatore Dist

E ‐758 Suzlon 1.2 510,220 12‐Feb‐08

Madhapur Village, Tirpur Taluk, Coimbatore Dist

7734 Enercon 2.5 200,000 9‐Sep‐08

Melkarapatti Village, Palani Taluk, Dindugal Dist

7737 Enercon 2.41 200,000 23‐Sep‐08


7798 Enercon 2.42 260,000 7‐Jan‐09



Land details for WTGs in Rajasthan



RKB ‐ 85 Suzlon 1.21ha 29‐Jan‐10 19 years 9 months Village: Bastwa Mataji; Tahesil: Shergarh, District:

Jodhpur NL ‐ 09 Suzlon 1.21ha 29‐Jan‐10 19 years 9 months Village: Bastwa Mataji;

Tahesil: Shergarh, District: Jodhpur

RKB ‐ 84 Suzlon 1.21ha 29‐Jan‐10 19 years 9 months Village: Bastwa Mataji; Tahesil: Shergarh, District:

Jodhpur RKB ‐ 87 Suzlon 1.21ha 29‐Jan‐10 19 years 9 months Village: Bastwa Mataji;


J ‐723 Suzlon 1.21ha 18‐Jul‐08 19 years Village: Deriya; Tahesil: Shergarh, District:

Jodhpur J ‐724 Suzlon 1.21ha 18‐Jul‐08 19 years Village: Deriya;



Jodhpur J ‐726 Suzlon 1.21ha 18‐Jul‐08 19 years Village: Deriya;



Jodhpur 7695 Enercon 2 ha 21‐May‐09 19 years 11 months Village: Bairu, Salodi &

Badi Tahesil: Osiyan/, District:












Jodhpur

7721 Enercon 2 ha 21‐May‐09 19 years 11 months Village: Bairu, Salodi & Badi

Tahesil: Osiyan/, District: Jodhpur










Annexure II

PLFs for Last Five years net of Auxiliary Power Consumption Machine No.

Supplier Year Of Comm.

PLF 2009

PLF 2010

PLF 2011

PLF 2012

PLF 2013

Average

N ‐13 Suzlon (2005 ‐ 2006) 22% 22% 20% 21% 23% 22%N ‐16 Suzlon (2005 ‐ 2006) 22% 24% 20% 21% 24% 22%LOC‐9 Enercon (2007 ‐ 2008) 15% 16% 15% 14% 16% 15%LOC‐10 Enercon (2007 ‐ 2008) 15% 16% 15% 17% 18% 16%LOC‐14 Enercon (2007 ‐ 2008) 15% 15% 15% 16% 16% 15%LOC‐15 Enercon (2007 ‐ 2008) 15% 15% 15% 16% 17% 16%LOC‐16 Enercon (2007 ‐ 2008) 15% 16% 15% 17% 18% 16%LOC‐17 Enercon (2007 ‐ 2008) 18% 18% 18% 19% 20% 19%LOC‐19 Enercon (2007 ‐ 2008) 21% 21% 19% 20% 21% 20%LOC‐18 Enercon (2007 ‐ 2008) 18% 20% 19% 21% 21% 20%LOC‐39 Enercon (2008 ‐ 2009) 11% 21% 20% 21% 22% 19%LOC‐40 Enercon (2008 ‐ 2009) 11% 19% 18% 19% 20% 18%LOC‐41 Enercon (2008 ‐ 2009) 10% 19% 18% 20% 21% 18%LOC‐42 Enercon (2008 ‐ 2009) 10% 20% 19% 20% 22% 18%LOC‐43 Enercon (2008 ‐ 2009) 9% 18% 18% 20% 22% 17%LOC‐44 Enercon (2008 ‐ 2009) 9% 19% 18% 19% 21% 17%LOC‐45 Enercon (2008 ‐ 2009) 14% 18% 19% 21% 18%LOC‐46 Enercon (2008 ‐ 2009) 14% 17% 18% 19% 17%LOC‐53 Enercon (2008 ‐ 2009) 17% 20% 22% 24% 21%LOC‐54 Enercon (2009 ‐ 2010) 14% 16% 17% 17% 16%LOC‐55 Enercon (2009 ‐ 2010) 14% 17% 18% 19% 17%LOC‐56 Enercon (2009 ‐ 2010) 16% 19% 19% 20% 19%Loc‐63 Enercon (2009 ‐ 2010) 15% 17% 18% 19% 17%Loc‐64 Enercon (2009 ‐ 2010) 15% 18% 19% 20% 18%Loc‐65 Enercon (2009 ‐ 2010) 17% 20% 20% 22% 20%Loc‐90 Enercon (2009 ‐ 2010) 19% 19% 20% 21% 20%Loc‐91 Enercon (2009 ‐ 2010) 18% 19% 20% 21% 19%Loc‐92 Enercon (2009 ‐ 2010) 17% 19% 20% 21% 19%Loc‐93 Enercon (2009 ‐ 2010) 15% 18% 18% 21% 18%Loc‐94 Enercon (2009 ‐ 2010) 18% 19% 20% 20% 19%RKB ‐ 85 Suzlon (2009 ‐ 2010) 16% 18% 22% 19% 19%NL ‐ 09 Suzlon (2009 ‐ 2010) 14% 18% 25% 22% 20%RKB ‐ 84 Suzlon (2009 ‐ 2010) 15% 19% 22% 19% 19%RKB ‐ 87 Suzlon (2009 ‐ 2010) 14% 22% 20% 20% 19%J ‐723 Suzlon (2007 ‐ 2008) 25% 26% 20% 22% 20% 23%J ‐724 Suzlon (2007 ‐ 2008) 24% 25% 18% 22% 18% 21%J ‐725 Suzlon (2007 ‐ 2008) 26% 26% 19% 22% 20% 23%


Machine No.


PLF 2009

PLF 2010

PLF 2011

PLF 2012

PLF 2013

Average

J ‐726 Suzlon (2007 ‐ 2008) 25% 25% 20% 21% 19% 22%J ‐727 Suzlon (2007 ‐ 2008) 26% 26% 19% 22% 18% 22%7695 Enercon (2008 ‐ 2009) 14% 26% 22% 23% 22% 21%7696 Enercon (2008 ‐ 2009) 14% 27% 21% 24% 22% 22%7708 Enercon (2008 ‐ 2009) 10% 23% 16% 21% 20% 18%7709 Enercon (2008 ‐ 2009) 12% 24% 19% 22% 21% 20%7719 Enercon (2008 ‐ 2009) 12% 27% 16% 23% 23% 20%7721 Enercon (2008 ‐ 2009) 11% 23% 21% 21% 19% 19%7722 Enercon (2008 ‐ 2009) 11% 19% 19% 17% 15% 16%7725 Enercon (2008 ‐ 2009) 10% 19% 15% 17% 17% 16%7735 Enercon (2008 ‐ 2009) 9% 18% 16% 17% 16% 15%7744 Enercon (2008 ‐ 2009) 10% 19% 18% 18% 17% 16%E ‐772 Suzlon (2008 ‐ 2009) 28% 32% 29% 27% 32% 29%E ‐773 Suzlon (2008 ‐ 2009) 29% 32% 29% 26% 31% 29%E ‐774 Suzlon (2008 ‐ 2009) 30% 32% 27% 27% 33% 30%E ‐085 Suzlon (2007 ‐ 2008) 27% 29% 23% 22% 27% 26%E ‐743 Suzlon (2007 ‐ 2008) 29% 33% 28% 25% 30% 29%E ‐744 Suzlon (2007 ‐ 2008) 28% 33% 28% 26% 32% 29%E ‐764 Suzlon (2007 ‐ 2008) 28% 31% 25% 25% 31% 28%PS‐385 Vestas (2007 ‐ 2008) 18% 23% 13% 8% 20% 16%PS‐472 Vestas (2007 ‐ 2008) 18% 20% 5% 13% 19% 15%PS‐473 Vestas (2007 ‐ 2008) 21% 24% 18% 17% 23% 21%PS‐474 Vestas (2007 ‐ 2008) 20% 21% 17% 17% 21% 19%PS‐475 Vestas (2007 ‐ 2008) 22% 25% 5% 17% 23% 18%PS‐512 Vestas (2007 ‐ 2008) 18% 22% 15% 8% 19% 16%E ‐742 Suzlon (2008 ‐ 2009) 30% 32% 27% 25% 29% 29%E ‐737 Suzlon (2008 ‐ 2009) 30% 32% 29% 30% 31% 30%EL ‐173 Suzlon (2009 ‐ 2010) 25% 20% 19% 23% 22%E ‐794 Suzlon (2009 ‐ 2010) 26% 21% 21% 25% 23%EL ‐165 Suzlon (2009 ‐ 2010) 28% 23% 22% 26% 25%EL ‐079 Suzlon (2009 ‐ 2010) 25% 23% 21% 26% 24%EL ‐122 Suzlon (2009 ‐ 2010) 28% 22% 22% 26% 24%EL ‐171 Suzlon (2009 ‐ 2010) 24% 23% 21% 24% 23%EL ‐128 Suzlon (2009 ‐ 2010) 25% 23% 20% 26% 23%EL ‐127 Suzlon (2009 ‐ 2010) 26% 22% 22% 25% 24%7786 Enercon (2008 ‐ 2009) 23% 23% 23% 25% 23%7797 Enercon (2008 ‐ 2009) 23% 22% 21% 27% 23%PS‐327 Vestas (2007 ‐ 2008) 19% 21% 14% 7% 20% 16%PS‐328 Vestas (2007 ‐ 2008) 19% 21% 1% 14% 19% 15%PS‐480 Vestas (2007 ‐ 2008) 20% 23% 17% 15% 22% 19%PS‐510 Vestas (2007 ‐ 2008) 22% 24% 16% 17% 23% 20%E ‐758 Suzlon (2008 ‐ 2009) 31% 34% 27% 27% 32% 30%


Machine No.


PLF 2009

PLF 2010

PLF 2011

PLF 2012

PLF 2013

Average

7734 Enercon (2008 ‐ 2009) 23% 23% 22% 25% 23%7737 Enercon (2008 ‐ 2009) 24% 25% 22% 25% 24%7798 Enercon (2008 ‐ 2009) 25% 23% 19% 26% 23% Average 19% 22% 20% 20% 22% 21%

Strictly Private and Confidential Information Memorandum

Annexure III Turbine wise detail of First Charge Holders

Machine No.

Supplier Location Bank Name Capacity M.W.

N ‐13 Suzlon Nagda Hills, Village Rajoda, Dewas,

M.P. State Bank of India,

Morena 1.25

N ‐16 Suzlon Nagda Hills, Village Rajoda, Dewas,

M.P. State Bank of India,

Morena 1.25

2 Total 2.5

J ‐723 Suzlon Ratangarh,Deriya,Jodhpur(Rajasthan) State Bank of India,

Morena 1.5


Morena 1.5


Morena 1.5


Morena 1.5


Morena 1.5

E ‐764 Suzlon Kallipalayam,Palladam (T.N.) State Bank of India,

Morena 0.6


Morena 0.6


Morena 0.6


Morena 0.6

LOC‐10 Enercon Rathedi Hills,Dewas(M.P.) State Bank of India,

Morena 0.8


Morena 0.8


Morena 0.8


Morena 0.6

E ‐758 Suzlon Madhapur, Palladam (T.N.) State Bank of India,

Morena 0.6

E ‐772 Suzlon Elavnthi, Palladam (T.N.) State Bank of India,

Morena 0.6


Machine No.



Morena 0.6

E ‐737 Suzlon Kattur, Palladam (T.N.) State Bank of India,

Morena 0.6


Morena 0.6


Morena 0.8

19 Total 16.7

PS‐385 Vestas Kallipalayam,Palladam (T.N.) Phoenix ARC Private Ltd

0.6


0.6


0.6


0.6


0.6

PS‐510 Vestas Madhapur, Palladam (T.N.) Phoenix ARC Private Ltd

0.6


0.6

PS‐327 Vestas Kulasekeramangalam,Tirunelveli (T.N.) Phoenix ARC Private Ltd

0.6


0.6


0.6

LOC‐41 Enercon Rathedi Hills,Dewas(M.P.) Phoenix ARC Private Ltd

0.8


0.8


0.8


0.8

14 Total 9.2


Machine No.


7695 Enercon Salodi,Tiwari,Jodhpur(Rajasthan) Central Bank of India, Morena

0.8


0.8


0.8


0.8


0.8


0.8


0.8


0.8

7735 Enercon Tiwari(Rajasthan) Central Bank of India, Morena

0.8

7744 Enercon Tiwari(Rajasthan) Central Bank of India, Morena

0.8

LOC‐9 Enercon Rathedi Hills,Dewas(M.P.) Central Bank of

India 0.8


India 0.8


India 0.8


India 0.8


India 0.8


India 0.8

LOC‐45 Enercon Rathedi Hills,Dewas(M.P.) Central Bank of India, Morena

0.8


0.8


0.8


0.8


Machine No.



0.8


0.8

Loc‐63 Enercon Rathedi Hills,Dewas(M.P.) Central Bank of India, Morena

0.8


0.8


0.8


0.8


0.8


0.8


0.8


0.8

30 Total 24

7734 Enercon Melkaraipatti,Dindigul,Pushpathur

(T.N.) IDBI, Bhopal 0.8



7786 Enercon Kottadurai, Dindigul, Pushpathur


7797 Enercon Kozhimankundan,Dindigul,Pushpathu

r (T.N.) IDBI, Bhopal 0.8



EL ‐079 Suzlon Kokkampalayam, Palladam(T.N.) IDBI, Bhopal 0.6 EL ‐122 Suzlon Kokkampalayam, Palladam(T.N.) IDBI, Bhopal 0.6 EL ‐173 Suzlon Kattur,Palladam (T.N.) IDBI, Bhopal 0.6 E ‐794 Suzlon Kattur,Palladam (T.N.) IDBI, Bhopal 0.6 EL ‐165 Suzlon Kattur,Palladam (T.N.) IDBI, Bhopal 0.6 EL ‐171 Suzlon Kokkampalayam, Palladam(T.N.) IDBI, Bhopal 0.6 EL ‐128 Suzlon Kokkampalayam, Palladam(T.N.) IDBI, Bhopal 0.6 EL ‐127 Suzlon Kokkampalayam, Palladam(T.N.) IDBI, Bhopal 0.6


Machine No.


RKB ‐ 85 Suzlon Bastwa, Bastwa Mataji,Jodhpur,

Rajasthan IDBI, Bhopal 1.5


Rajasthan IDBI, Bhopal 1.5

15 Total 11.8

NL ‐ 09 Suzlon Bastwa, Bastwa Mataji,Jodhpur,

Rajasthan Central Bank of India, Morena

1.5


Rajasthan Central Bank of India, Morena

1.5

2 Total 3

82 Grand Total

67.2


Annexure IV

Notification & Clarification on Depreciation rate

Income‐tax (Fourth Amendment Rules, 2012 – Depreciation restricted to 15% on wind mills installed after 31‐3‐2012

Notification No. 15/2012 [F.No.149/21/2010‐SO(TPL)] S.O.694(E), dated 30‐3‐2012

In exercise of the powers conferred by section 295 of the Income‐tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income‐tax Rules, 1962, namely:‐

1. (1) These rules may be called the Income‐tax (4th Amendment) Rules, 2012.

(2) They shall come into force on the 1st day of April, 2012.

2. In the Income‐tax Rules, 1962, in the Table, in the New Appendix I, in Part‐A relating to Tangible Assets, under the heading “III. Machinery and Plant”, in item (8), in sub‐item (xiii), ‐

(a) In clause (l), after the words, “which run on wind mills”, the words, figures and letters, “installed on or before 31st day of March, 2012”, shall be inserted ; and

(b) In clause (m), after the words, “running on wind energy”, the words figures and letters, “installed

on or before 31st day of March, 2012”, shall be inserted.

Depreciation @80% is eligible on “windmills and any specially designed devices which run on

windmills” under Income Tax Act.

It may be noted that a recent amendment notification issued by CBDT has withdrawn the benefit

of 80% depreciation rate on windmill installed after 31.03.2012. Therefore, windmills installed on

or after 01.04.2012 shall be allowed depreciation @15% and additional 20% depreciation during

the first year alone. In the instant case the windmills are installed on or before 31st day of March,

2012, therefore, the buyer may be eligible for 80% depreciation even after this notification.

Under Income Tax Act, the depreciation to buyer is allowed on “Actual Cost”. Section 43(1) of

Income Tax Act provides the definition of “actual cost”.

For the purpose of allowing depreciation, on the asset acquired on such succession, “cost to the

assessee” means cost to seller so long as he continues to be the owner of assets. In the hands of

buyer, the depreciation is to be calculated on the cost of the assets to Buyer and not the cost of

assets to Seller. Reference may be made to Indian Iron and steel Co (1943),11 ITR 328 (PC).


Annexure V

Contact Details of SBICAP officials

Supriyo Gupta Vice President [email protected] Tel: 011‐23416040 M: +918447498894 Fax: 011‐23415797 Abhinav Gupta Asstt. Vice President [email protected] Tel: 011‐23418460 M: +919560397194 Fax: 011‐23415797 Amit Kumar Manager [email protected] Tel: 011‐23418460 M: +919560397213 Fax: 011‐23415797 Rekha Natarajan Manager [email protected] Tel: 011‐23418460 M: +918860242452 Fax: 011‐23415797

wind assets im-final for upload - ks oils · information memorandum page 2 important notice this im...

Documents