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Suzlon Energy shares up 5% on restoration of depreciation rules

Accelerated depreciation, a scheme disallowed two years ago, allows companies to claim a bigger deduction during the initial years after the purchase of an asset compared with other depreciation accounting methods.

twitter-logoReuters | July 21, 2014 | Updated 12:29 IST
Suzlon Energy windmill turbines
Power-generating windmill turbines in Suzlon wind farm near Ahmedabad (Photo: Reuters)

Shares in Indian wind turbine maker Suzlon Energy Ltd surged nearly 5 per cent, its daily limit, on Monday following the government's move to re-introduce the accelerated depreciation scheme for the wind energy sector. The gains added to Suzlon's 3.6 per cent gain in the previous session.

Finance Minister Arun Jaitley said on late Friday that the government would amend the Finance Bill in this regard.

Accelerated depreciation allowed companies to claim a bigger deduction during the initial years after the purchase of an asset compared with other depreciation accounting methods, under which the cost was spread evenly over the lifespan of an asset.

The accelerated depreciation scheme was disallowed two years ago under the previous Congress-led government.

Accelerated depreciation could spur more orders of wind turbines and renewable assets and Suzlon would likely be a key beneficiary as the world's fifth-largest wind turbine maker, some analysts said.

"Accelerated depreciation will be significantly positive for the wind turbine industry and Suzlon in particular," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.

Suzlon, whose units include REpower Systems SE, is the only listed wind energy player in India. Its shares were up 4.85 per cent at Rs 25.95, outperforming a 0.6 per cent gain in the broader NSE index.

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