All for Rs 57-lakh dues: Inox Wind first insolvency case in green energy

Jeena & Company has dragged Inox to NCLT over non-payment of dues

The ongoing insolvency heat has caught on in the renewable energy space with Inox Wind being put under the corporate insolvency resolution process. In a rare instance, a Customs agent, Jeena & Company, has dragged Inox to the National Company Law Tribunal (NCLT) over non-payment of dues totalling Rs 57 lakh.

At the same time, Inox Wind has laid off close to 400 employees at its manufacturing unit. A former employee said Inox Wind was yet to clear his final settlement, which was pending for over four months. “The company has no cash flow whatsoever. It is not even able to fulfil its current orders,” he said.

Deepak Asher, director and group head, corporate finance, Gujarat Fluorochemicals Ltd (GFL), told Business Standard, “It is a non-case and will be quashed (on appeal).” Inox Wind is a subsidiary of the GFL. Asher is a non-executive director at Inox.

Inox Wind has orders to manufacture turbines to generate 300 Mw. A person close to the development said the company had exhausted its working capital. The company was failing to honour contracts for wind turbine generators, said industry sources.

A text message sent to the company’s spokesperson and Devansh Jain, wholetime director, Inox Wind, seeking comments on the matter, did not draw a response.

In the NCLT order dated July 11, 2017, the court has appointed an interim resolution professional and suspended the powers of Inox Wind’s board of directors. “The management of the affairs shall vest with the interim resolution professional and officers and the managers of the ‘corporate debtor’ shall report to the IP, who shall be enjoined to exercise all the powers vested with the IP,” the order states.

In its petition, Jeena & Company, the operational creditor, submitted that Inox Wind had an outstanding payment of Rs 57.5 lakh as of March 25, 2017. It said the petition had been filed as the company had  neither paid the amount nor acknowledged any of the demand notices sent. Insolvency professionals said this was a classic example of the insolvency code actually working as envisioned. These professionals feel that the code will benefit unsecured creditors like Jeena & Company. This falls under Section 9 of the Insolvency and Bankruptcy Code, 2016. In such cases, the operational creditor issues a demand notice to the firm. If the firm fails to pay, the operational creditor can introduce insolvency proceedings.

With the company issuing an advertisement seeking buyers, the insolvency proceedings begin. In the absence of a buyer the committee of creditors will formulate a restructuring plan. The code gives a company 180 days for resolution failing which either the company can get an extension for another 90 days or go in for liquidation.

This comes just two months after Inox Wind sold off its portfolio of 260 MW of operational wind power projects and decided to exit the wind farming business. The move was meant to help the parent company pare its debt. Inox Wind kept the wind turbine manufacturing business for itself.

The company recently made headlines by winning a 250 Mw project at a historic low bid of Rs 2.97 per unit in the maiden wind power project tender. The project will come up in Tamil Nadu.

The portfolio sale was to JP Morgan Asset-backed Leap Green Energy Pvt Ltd. The projects are spread over Rajasthan, Maharashtra, Madhya Pradesh and Tamil Nadu and are owned and managed by IRL IR Jaisalmer (IRJL). The company did not disclose the transaction amount but by market estimates, the deal size is estimated to be close to Rs 1,300 crore.

Inox Wind executives had then said the deal would help it pare the group company’s debt and help it focus on its core business of wind turbine manufacturing.

Sector experts pointed out that the crisis was the result of aggressive expansion by Inox Wind and regulatory hurdles faced by the industry during the past four years.