That the share price of Suzlon Energy, India’s only listed wind turbine manufacturer, would go up after the ‘accelerated depreciation’ announcement was a one-way bet. And sure enough, the prices surged almost 5 per cent to ₹25.85 on Monday.

On Friday, Finance Minister Arun Jaitley said the Government would move an amendment to the Finance Bill to bring back the tax-saving benefit and the measure will come into force as soon as the Bill is passed by Parliament, before July 31.

Bigger deduction

The accelerated depreciation scheme, which was disallowed two years ago, allows companies to claim a bigger deduction during the initial years itself after the purchase of an asset. In contrast, under other depreciation accounting methods, the cost is spread evenly over the lifespan of an asset.

Profit-making companies will now have an option of putting up wind power turbines and write down 80 per cent of the cost of the machines — about ₹6.5 crore a MW — as depreciation for the purpose of calculating taxable profits. Industry experts believe this measure would revive the “AD market” for wind turbines, a market worth 1,000 MW in a full year.

Expanding market

Suzlon, an established player and a market leader, could be expected to benefit from the expansion of the market. However, analysts point out that the problems of Suzlon, a company with consolidated revenues of ₹20,200 crore, are not related to market or orders.

The company has always maintained that it has enough orders, both in India and abroad. At the end of 2013-14, Suzlon had global orders for 5,300 MW. In the last two months, it won orders for 200 MW from Indian companies.

Its problems are mainly financial-debt. The “AD market,” which Suzlon will have to share with other wind turbine biggies such as Gamesa, Enercon, Regen Powertech, GE and Inox, will not be a very significant addition to its order book, note analysts.

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