First published in the Quoted Cleantech newsletter, January 2011. Copyright Cleantech Investor 2011

Alternative Investment Market-quoted Indian Energy says it is talking to a number of strategic investors in order to gain funding to expand its business. This could lead to a bid for the India-focused wind power company.

Indian Energy is trying to conserve its cash by cutting overheads so that it can reach profitability more quickly. The company has secured an option agreement with Suzlon Energy over the 50.4MW Tejuva wind farm project in the state of Rajasthan, but it still needs to secure finance in order to take up the option. Indian Energy’s main shareholder, Utilico Emerging Markets, has increased its loan to the company from £2 million to £2.5 million.

Although the company still had £3 million in the bank at the end of September 2010, that figure represents less than the cash outflow from operations in the first half.

Indian Energy recently reported that its Gadag project did not generate as much power as anticipated because a bad monsoon in Karnataka had led to a lower wind resource. And the firm’s Theni project in Tamil Nadu started generating power more than two months later than expected because of problems connecting to the grid. That resulted in the Theni project making a contribution for just over one month during the first half of Indian Energy’s current financial year.

Indian Energy’s interim revenues rose from £1.4 million to £2.3 million during the six months to 30 September. The business made an operating profit in the first half, but this was not enough to cover interest charges and adviser costs. The loss fell from £2.1 million to £795,000.

At 20.5p each, the shares currently trade at a large discount to net asset value of 53p a share.