State Bank of India, which has a Rs.3,500—crore of fund and non-fund based exposure to Suzlon Energy, on Thursday, said the Pune-based wind power major should look at leveraging the balance sheet of its German subsidiary RE Power, and a merger.
“Suzlon needs to leverage the RE Power balance sheet and probably in the long-run, merge these two operations. Because when they merge, the profitability of the whole group can go substantially higher using low-cost of production here,” SBI Deputy Managing Director, (Large Corporates) Santosh B. Nayar told reporters here.
Noting that RE Power was practically debt-free and had got huge cash pile, he said the German arm was also ring-fenced by German banks.
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SBI is lead banker to Suzlon’s Rs.14,000-crore debt. The Pune-based company is also reportedly pitching for a debt recast, but SBI has ruled it out in the short-term.
“We will have to discuss with the company on CDR; we will have to look at their cash flows now and we will see what needs to be done and also see what are the assets, which can be monetized,” Mr. Nayar said.