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Gamesa open to taking equity in select customers’ companies

A couple of days ago, Gamesa announced its half yearly results where it had beaten forecasts with solid growth in India and Latin America. The company announced that 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) .

This places India in a very important position in Gamesa’s overall plans. According to reports, the Spanish wind power equipment major Gamesa is open to taking equity positions in customers’ companies, if it would help the customers.

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

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

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

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

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

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

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

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

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