Suzlon loss at Rs 59 cr on blade retrofit costs

Written by feBureau | Mumbai | Updated: Feb 1 2009, 03:42am hrs
Replacement costs on faulty blades and forex losses in the third quarter have hit wind power major Suzlon Energy hard, with the company posting a net loss of Rs 58.9 crore compared to a net profit of Rs 151.69 crore in Q3 of FY08.

The results are on a consolidated basis and include performance of three group companies, Suzlon Wind Group. Hansen Group and REpower group. Together, Suzlon, the worlds fifth largest wind turbine manufacturer, incurred Rs 233.13 crore as blade retrofit charges in the quarter, and has made provisions for an additional Rs 171 crore for the same in FY09. The group also incurred mark-to-market losses on foreign exchange contracts to the tune of Rs 123.97 crore in the quarter.

Sumant Sinha, COO, Suzlon Energy, said that the company has completed a full root cause analysis and implemented a corrective action regarding the faulty S88 V2 blades. It had supplied a total of 400 turbines in the V2 series in 2007, which had a total of 1,200 blades. Of these, cracks had appeared in 170 blades, which the company is now replacing. The planned retrofit and replacement programme to strengthen all the V2 blades is on schedule, with 85% of the project scheduled to be completed by March 2009, Suzlon said in a statement. Meanwhile, the company saw a substantial growth in revenues, from Rs 3,169.76 crore in Q3 08 to Rs 6,893 crore in Q3 of FY09. The industry has grown over 34% CAGR over the last five years, but sees the global credit crunch dampening demand for turbines. The fundamentals, however, remain strong with energy security, sustainable energy and climate change high on the public agenda, Suzlon said. The company sees a de-growth in turbine sales in the US, a flat demand in Europe, but growth in demand in countries like Australia, China, Brazil and South Africa.

Shares of the company rose 6% on the BSE on Friday to close at Rs 47.30 after it said it was negotiating for 2,000 MW of orders that could double its order book. The company is in negotiations with existing and prospective customers for projects totaling over 2,000 MW across the US, Europe, China and Australia.

The long term fundamentals of the wind industry remain strong. We see an upswing in the industrys growth from 2010. We expect the new US administration to provide a strong boost for renewables, Tulsi Tanti, CMD, Suzlon Energy, said.