Debt-laden wind turbine maker Suzlon today reported a widening of consolidated net loss at Rs 6,538.68 crore for the third quarter ended December 2014 on the back of sale of its overseas subsidiary Senvion.
The company had reported a loss of Rs 1,075.25 crore in the corresponding period a year ago.
Its total income declined marginally to Rs 4,977.18 crore during the October-December quarter as against Rs 5,052.2 crore in the third quarter of FY14.
“The huge loss during the quarter is on account of the notional loss to the extent of around Rs 6,000 crore on the sale of our overseas subsidiary Senvion last month,” the company’s Chairman Tulsi Tanti told PTI here today.
Last month, the company had sold Senvion to Centrebridge Partners LP for Rs 7,200 crore as part of its strategy to hive off non-core businesses and reduce debt burden of over Rs 17,000 crore.
“Most of the proceeds of this deal will be used to pay off our debt. Besides, we are also looking at selling stake in SE Forge, another non-core business,” he said.
However, he did not disclose further details on how much the company is expecting from the sale of subsidiary.
“It is too premature to talk about this. But we will be using the funds raised through the sale for repaying our debt,” Tanti said.
The company has also sold stake in its manufacturing capacity in China as well as in US-based Big Sky wind farm.
Meanwhile, the company has also signed definitive agreements with Dilip Shanghvi Family and Associates (DSA) for equity investments of Rs 1,800 crore in Suzlon Energy.
Post allotment, DSA shareholding will be 23 per cent shares (based on current shareholding), while the Tanti Family will hold 24 per cent shares.
Management control will remain with Tanti family by virtue of pooling arrangement for voting.
“All the strategic initiatives are extremely crucial and will pave the way for our growth. These bold steps will strengthen our capital structure permanently, enabling significant de-leveraging and liquidity to ramp up volumes rapidly,” he said.
The proceeds of both the transactions are expected to be received before March 31, he added.
Both Suzlon and Sanghvi will form a joint venture to develop 450 MW with farm, a move that will mark the latter’s foray into the renewable energy business.
Besides, the Sanghvi Family and Associates will provide project specific non-fund capital for two years, which will be utilised for execution and capacity utilisation, Tanti said.
“With our market leadership, technology strength, successful project execution and best-in-class service, Suzlon is best placed to capitalise on the opportunities offered by the renewable sector.
“We are convinced that the support from Dilip Shanghvi Family will help in creating a long-term sustainable value for our stakeholders,” Tulsi Tanti said.
Commenting on the deal, Dilip Shanghvi said, “This financial investment is in sync with the Prime Minister’s long-term vision and immense potential of the renewable energy market.
“While we believe Suzlon has the potential to emerge as a global leader in the renewable energy space from India, it will take substantial and sustained effort on part of the management team to achieve a significant operating performance improvement. We will continue as financial investors.”
Tanti further said the company would come into black in next fiscal.
“We are focusing on execution of our current order book and increase capacity utilisation from 25 per cent to 80 per cent.
“We hope we will be able to report profits in next fiscal. We are also converting foreign currency bonds to the extent of Rs 875 crore into equity to reduce debt,” he said.
He further said Suzlon is poised to enter FY16 with a strong liquidity position to tap the opportunity available in India as well as key growth markets like USA, China, Brazil, South Africa, Turkey and Mexico.
“With our focus on execution, we expect to gain 40 per cent share in the domestic market in next fiscal,” he added.