Suzlon Maintains Full Year Revenue Guidance Despite Biggest Ever Quarterly Loss - Pimagazine Asia
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Suzlon Maintains Full Year Revenue Guidance Despite Biggest Ever Quarterly Loss

Suzlon Energy has had to face the effects of a worsening economic environment, and have reported it’s biggest ever quarterly loss of 849 crore in April-June. Suzlon Energy, who produce wind turbines, have made fewer sales and have had to cope with rising interest costs and a wildly fluctuating currency.

Sales rose a modest 9% to 4,770.66 crore, and chief financial officer Kirti Vagadia has admitted, “The first quarter has been difficult. Our profitability has been hurt due to low volumes, higher sales in low margin markets, higher interest cost and a foreign exchange loss 153 crore”.

Other factors affecting growth is the Indian wind energy industry. Despite expecting to add another 15,000 mw in the next five years, the government rolled back some of the incentives earlier this year which cast a shadow on growth and aggravated the challenges of companies such as Suzlon. Sources at Suzlon have disposed of non-critical assets, such as wind farm assets in India along with manufacturing assets in China.

Nevertheless, Suzlon remains optimistic about future growth, having maintained its full year revenue guidance of 27,000-28,000 crore despite the bad results. Chairman and managing director Tulsi Tanti released a statement: “Our core business fundamentals remain sound – high gross margins, strong and firm order book, and high turbine availability – and we are embarking on a robust programme, project transformation, to reduce annual operating expenditure and manpower cost by 20% by the end of the year.”

The Suzlon group order book was worth around 39,700 crore as on Monday. Suzlon said it bagged new orders of 456 mw and framework agreements of 200 mw signed in the first quarter of 2012-13.
However, Suzlon’s big losses will come when it tries to raise money and repay its foreign exchange liability of $209 million bonds in October. One bond of $360 million was redeemed earlier this month. But this was not enough to stop shares of Suzlon falling by 2.6% to 17.70, which is just above its 52-week low of 17.

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