Let us talk about the auction how much power are you expected to generate post the bid?
Devansh Jain: We had bids ranging from Rs 4 to 4.72 to begin with which obviously kind of kept going down as the option to place I think as the auction lasted for close to 11 hours. The bids closed at 3.46. We had five bidders at that price, four were awarded 250 megawatts and the fifth bidder was awarded approximately 50 megawatts and because there is a minimum criteria which they need to award. Although the tender does have an option for a Greenshoe option, wherein, we could go ahead and award 250 megawatts to the fifth bidder. What we understand at this point in time, is it is 1000 plus fifty 50050. The four winners included Inox Wind, Sembcorp, Mytrah, and Ostro and the fifth was Adani Green Energy which got the last 50 megawatts so that is a broad gist of what happened in the auction.
ET Now: What has led to prices dropping to such low levels are such low prices sustainable for players like you?
Devansh Jain: I think, we need to look at it from three or four perspectives. First and foremost, what an auction does in any sector is leads to the most competitive player surviving and increasing market share. Second, players with the most advanced technology and the most competitive turbines are the ones who will be ruling roost here. So, these are the two criteria, which led to what is available in the market. Speaking for Inox Wind, it is a known fact that we are probably the lowest cost manufacturers of wind turbines not only in India but probably globally as well. From a technology perspective, our recently launched 120 meter hub height turbine combined with a 113 rotor diameter is probably the most competitive and the most energy efficient wind turbine in the market at this point in time.
ET Now: Worries about this impacting your margins are also there what are your cost and how are you going to sustain your margins in the near term?
Devansh Jain: Again rather than margins, what I will just give you simple example is what has been happening in the past we have had. We used to have an 80 meter hug height turbine and 93 rotor diameter. In the past three years, the 93 rotor diameter turbine moved to a 113 rotor diameter turbine and the 80 meter hub height has now moved to 120 meter hub height so we have actually increased efficiency or reduced the cost of energy by close to 50% whereas the cost of doing so was not 50% maybe it was 20%.
So, there was an incremental 30% which was available which went towards reduction in tariffs in many states partly, partly went towards better returns for IPPs and partly went towards higher margins going into the future with the 120 meter turbines for us. What is going to happen in the future is margins because we are the lowest cost producers margins may just remain the same or increase very minutely and why I say this specific to Inox Wind because we still have a lot of other competitors who are burdened with a lot of baggage be it higher cost structures or lot of debt or whatever it may be. So, it is not a one play a market Inox Wind ideally can control the whole market but we would not be taking 100% of all the tenders at all points in time.
ET Now: What is your current order book at and what are the projects that you are currently bidding for?
Devansh Jain: We disclose our order book at the end of every quarter and as of 31st December, our order book was close to about 1300 odd megawatts but with these auctions obviously what is very clearly we have already won this 250. We are talking with all the parties involved in the auction. I think, we will have a substantial volume which would accrue to us like I said we are the most competitive just from this auction.
The government is very clear they would be auctioning another 3 to 4 gigawatts of wind over the next one year. We are ideally placed for that. Let me just remind you even at 1300 odd megawatts, we had the largest order book and I think this momentum will continue, we have already added 250 to that. I think there is a very very robust line up thanks to these auctions going forward.