Ways2Capital Reviews : Inox Wind Down ~4% Due To Change Of Auditors

Inox Wind stated that Patankar & Associates (P&A) would cease to be the auditors of the company, as per a release filed with BSE. The company has said that P&A have been requesting the management of the company to relieve them of their responsibilities as Statutory Auditors of the Company for almost a year, as they are facing time constraints due to their other commitments and engagements.

Inox Wind was P&A’s only statutory audit in North India, and hence it was physically and logistically difficult for P&A to continue with this audit. After conclusion of audit for the financial year FY18, the management of the company relieved them of this Statutory Audit assignment. The auditors stepped down post 9th AGM of the company in 2018. The company will be appointing new Statutory Auditors today on the recommendation of the Audit Committee, for a period of five years.

The market has reacted negatively on the news as the exit has cast doubts over corporate governance and transparency of Inox Wind. The market reaction may also be influenced by the recent developments in Manpasand Beverages, wherein the auditors quit citing that they were not provided certain distribution related data.

On the business side, Inox Wind has been suffering from lower realizations and stretched working capital since couple of years. The tariff in wind sector has declined due to shift from a feed-in-tariff (FiT) route to the competitive bidding route. Therefore, aggressive bidding will adversely impact developers and equipment manufacturers. However, the silver lining in FY18 was that 7.5GW of auctions took place under various SECI and state auctions. This should provide a base for a strong execution cycle for the wind industry over the next 12 to 18 months. The company believes that FY19 could be a strong turnaround year with stable execution for the whole wind sector. During Q4FY18, the company won 350 MW from SECI (300MW) and 50MW from Maharashtra state auctions taking its total auction-based order book to a sector leading 950MW.

In Q4FY18 its revenue stood at Rs203cr as compared to Rs1,019cr in Q4FY17. It incurred an EBITDA loss of Rs30cr in Q4FY18 as compared to an EBITDA profit of Rs230cr in Q4FY17. PAT loss for the quarter stood at Rs55cr as compared to Rs127cr profit in the preceding year quarter. On the balance sheet side, the company has reduced net working capital from Rs1,804cr at FY17 end to Rs1,239cr at FY18 end, while net receivables have dropped from Rs2,336cr in FY17 to Rs1,060cr at FY18 end.
 
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About Bhoomi Desai

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