Worsening receivables collection leads to increased net debt and rceivable days increased to 200 days for FY16, from 192 days at end-FY15. This coupled with the increase in loans and advances (partly due to inter-corporate deposits to related entities) caused net debt to rise to Rs 9.1 billion for FY16, compared to Rs 1.65 billion at end-FY15.
While the Q4FY16 results were largely in line with Street estimates, the numbers did not translate into cash flow due to the increase in receivables leading to higher working capital requirements. However, management claims working capital build is largely optical. In the post-results concall, management explained that the increase in working capital is largely “optical” given that more than 40% of the sales for FY16 occurred in Q4, thus the collection period will spill over into Q1FY17. Annualising Q4 sales, the receivables days fall to 148 days, but is higher than the adjusted number of 140 days for FY15.
Management believes that working capital build will reverse with increased synchronisation of manufacturing activities following capacity expansions and commissioning of common infrastructure work. Management targets 120 days of receivables and expects to be net cash positive by the end of FY17 on strong free cash flows. Expansion into southern states. Inox Wind highlighted that it is planning major forays into the southern wind-rich states of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh.
