Suzlon Group has sold 75 per cent stake in its China-based manufacturing subsidiary, Suzlon Energy Tianjin, to Poly LongMa Energy (Dalian), for $28 million (about Rs 176 crore).

China-based Poly LongMa Energy is a conglomerate focused on conventional and green energy investments.

In June 2012, Suzlon announced that it had signed a binding agreement to sell its Chinese subsidiary to China Power (Tianjin) New Energy Development Co Ltd, for $ 60 million or Rs 340 crore. That deal did not work out.

Today’s announcement values the Chinese subsidiary at about $ 37 million. According to reliable sources, this is a more realistic valuation for the subsidiary, which is not profitable. The land for the Chinese subsidiary is in Suzlon’s name and there would have been problems in selling the company completely because of certain clauses in the original agreement with the Chinese government, according to the sources. Also, Suzlon will get a one-fourth share of the receivables, which are substantial. Suzlon hopes to benefit once the Chinese business picks up, which will help it in getting a good price for its remaining stake.

Suzlon is under corporate debt restructuring (CDR) with loans worth close to Rs 9,000 crore restructured. The company’s domestic lenders, a consortium of 19 banks, approved the CDR package in January.

Suzlon said it would continue to own 25 per cent share in the company as joint venture partner. Poly LongMa Energy (Dalian) Ltd will lead marketing and sales operations in China, with Suzlon acting as technology partner with its existing China portfolio.

Tulsi Tanti, Chairman, Suzlon Group, said: “With this joint venture, we monetise an asset we have built up from 2006, and through our partner, Poly LongMa Energy (Dalian) Ltd, maintain our strong presence in the world’s largest market. The new joint venture will be well positioned in China and offers the potential to explore exports as well.”

shanker.s@thehindu.co.in

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