Suzlon feels financial woes over with REC-led refinance

Suzlon Group feels the financial difficulties that afflicted the wind turbine maker are behind it, with the more than ₹3,000-crore debt refinance led by REC.

The Pune-based company, which once struggled to pay its over ₹6,500 crore debt, feels its order book, pipeline of potential business and government policies are other tailwinds that will offer support, a senior official said.

The company is looking to raise up to ₹1,200 crore through a rights issue of shares by the fiscal-end to pare the refinanced debt of ₹3,000 crore, its Chief Financial Officer Himanshu Mody told PTI.

He said the recent developments on the debt side, which saw Rural Electrification Corporation (REC) and Ireda taking over ₹3,000 crore of debt through a refinance and an SBI-led 16-bank consortium settling for a 5% equity in the company for the remaining ₹3,500-crore exposure, would help strengthen its balance sheet.

“The financial woes are behind us. We have a healthy balance sheet, good order book and a strong pipeline,” Mr. Mody said.

He said having two lenders who had a better understanding of the sector it operated in would help it reduce the bureaucratic challenges posed while being in a consortium of lenders and take advantage of business growth opportunities timely.

Right now, the debt to operating profit ratio stands at 3:1, and the same may go up as it borrows more for working capital needs, but overall, the trajectory on the debt profile is towards improvement, he noted.

Mr. Mody said scheduled debt repayments would get the debt levels down to ₹2,500 crore but the company wanted to trim it further.

With this in mind, its board had approved raising up to ₹1,200 crore through a rights issue of shares, which Mr. Mody said would happen in FY23, and also monetisation of non-core assets.

He declined to provide any further details on the non-core assets which the company planned to sell, but exuded confidence that it would be able to realise a sizeable amount through the divestment.

The debt owed to REC and Ireda was long term in nature, but the tenor was significantly lesser than the earlier 20 years for the term loans from the banks’ consortium, he said.

The company did not have any major investment plans beyond operational capital expenditure (capex) which could be funded through working capital lines, and would be focusing on improving its capacity utilisation, he added.

It has an order book to deliver up to 700 MW of capacity, Mr. Mody said, pegging the pipeline of deals it was chasing at a similar level.

Government policies, including last month’s announcement of taking a relook at the e-reverse auction of wind energy projects with a view to removing it, were positives which were helping the wind energy sector, he said.

The company did not have any major contribution from exports in its ₹1,378-crore revenue [in Q1 FY23], and would now be able to chase deals outside India. The conditions imposed by the bankers’ consortium had also ended, he said.

It was also undertaking a year-long exercise to reduce the number of subsidiaries to 24 from the present 44 entities to increase transparency, Mr. Mody said.

A one-time gain helped the company post a huge profit of ₹2,433 crore in the June quarter.

Mr. Mody said the operating profit of ₹214 crore can be sustained going forward as well, given the visibility that it has. He also said two credit rating agencies had upgraded its debt to investment grade after the debt refinance scheme was carried out.

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Printable version | Aug 15, 2022 7:33:22 pm |