High share-pledge by promoters earns Suzlon Energy ‘negative’ rating

Our Bureau Updated - March 12, 2018 at 01:41 PM.

suzlon

As much as 95.56 per cent of the shares held by the promoters of Suzlon Energy Ltd or 50.42 per cent of the overall shares of the company, stood pledged with lenders as on June 30.

This, and the “irregularities in debt servicing” by the company, have caused the rating agency ICRA to take a “negative” view of Suzlon Energy and its eight subsidiaries.

The agency has revised down the ratings of long and short-term debt facilities, with “negative outlook”.

For the quarter ended June, Suzlon reported consolidated net loss of Rs 849 crore, compared with a net profit of Rs 60 crore for the previous year.

The numbers consolidate the figures of eight subsidiaries — Suzlon Wind International, SE Composites, SE Electricals, Suzlon Engitech, Suzlon Generator, Suzlon Gujarat Wind Parks, Suzlon Power Infrastructure and Suzlon Structure.

Industry observers trace the origins of Suzlon’s troubles to the company’s purchase of the German wind turbine manufacturer REPower in 2008. Suzlon owns 100 per cent of REPower, which it acquired in phases, at a cost of €1.8 billion.

Today, a stake sale in REPower looks possible and there have been reports that Alstom is in talk with Suzlon for that purpose.

As at the end of last quarter, Suzlon had orders worth Rs 40,000 crore for 5,600 MW of turbines. The problems facing Suzlon are therefore, in finance.

In its press release of August 13, Suzlon said that its first quarter volumes were “significantly constrained by a shortfall in working capital facilities”. On the BSE on Friday, the Suzlon share, of face value of Rs 2, closed at Rs 16.80.

> mramesh@thehindu.co.in

Published on August 18, 2012 12:10