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Gamesa beats first half forecast with solid growth in India and Latin America

Wind energy has witnessed a lot of activity in recent times in India. Panchabuta, has earlier talked about the  Generation Based Incentives (GBI) scheme for grid connected wind power projects with the objective of broadening the investors base by attracting FDI and independent power producers.

India had 11,800 MW of wind power installed at the end of March 2010 according to the Indian Wind Energy Association, making it the world’s fifth largest wind power market.

The  installation  in India being range bound  between 1470-1750MW  a year over the last five years and the installed capacity for 2009-10 was around 1565MW.

The overall installed capacity in the year 2010-11 was about 2300MW.

In March this year, Gamesa announced expanding  its presence in India by putting up three more facilities that will make various parts for the wind turbines. The company announced an investment of about Rs 500 crore in units that will make blades, towers and nacelles.

In April this year, IFC, a member of the World Bank Group, had said it was providing an €11 million loan to India’s Gamesa Wind Turbines Pvt. Ltd to help build a wind-turbine assembly facility.

With an aggressive growth plan, Gamesa in India had a 10% market share after only 18 months’ presence. In 2010, Gamesa installed about 140 MW – it sells 850 kW turbines – and hopes to sell more than three times that number, about 500 MW, in 2011 the company said.

In May this year, the company signed an order with Caparo Energy India Limited (CEIL), India’s fastest growing independent power producer for the supply, erection and commissioning of 2,000 MW of turbine capacity for wind power projects to be set up in India.

Since, Gamesa has expanded into a number of new markets in India including Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh and Karnataka.

The company in an announcement of its results has mentioned that, the backlog for delivery in 2011 (2,270 MW) has already covered 77% of the wind turbine sales guidance for 2011. Sales coverage in July stands at 80% .

The company further added that 100% of MW sales were outside Spain. In India, sales increased 2.4-fold (accounting for 17% of the total) and 4-fold in Latin America/Southern Cone (19% of the total) .

EBIT margin of 5.2% (slightly higher than guidance) and deliveries doubled in the period (1,106 MW), with a significant contribution from the US and India.

Wind turbine sales (in MWe) expanded by 29% to 1,292 MW, entirely outside Spain, and reinforcing the company’s internationalisation strategy. The backlog for delivery in 2011 amounted to 2,270 MW in June, covering 77% of the wind turbine sales guidance for the year (2,800-3,100 MW). In 2Q11, Gamesa received orders for 564 MW for delivery in the year, i.e. up 65% with respect to 2Q10 and 93% with respect to 1Q11. Sales coverage in July stands at 80%.

Wind turbine deliveries doubled in the period, to 1,106 MW, with the US and India each accounting for over 200 MW in the period.

Sales growth and cost optimisation (materials, construction and logistics) provided the Wind Turbine division with an EBIT margin of 5.2% (slightly higher than guidance for the year: 4%-5%), despite the highly competitive operating environment. Working capital in the wind turbine division amounted to 25% of sales, due to greater internationalisation (entry into new markets, such as Brazil) and the seasonality of deliveries in China and India.

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