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With Dilip Shanghvi of Sun Pharmaceutical buying a 23 per cent stake in Suzlon Energy and Centrebridge buying Senvion SE, the Suzlon group is looking at a considerable debt reduction. The group is also likely to book a profit in the next financial year.
Besides, the company has committed to build wind turbine manufacturing of 11,000 megawatts. "For the past two years, we are looking for ways to manage our debt liability. So, this is a conflict situation - one side there is an enormous opportunity in the domestic and global markets; the other, we have to keep our interest cost low," Tulsi Tanti, the founder and managing director, told Business Standard.
Despite the promoter holding getting reduced to 24 per cent, Tanti said they would continue to have management control and voting rights. With 2.7 gigawatts (Gw) committed in the renewable energy space, Tanti said his company would build capacity to cater to the demand. Besides, the business mix for Suzlon would reverse to 70 per cent from India and 30 per cent from abroad, though the major markets would continue to be China, Brazil, the US, and Mexico.
The focus would be hybrid: Solar with wind. Tanti said to promote investment, the government should bring a captive power generation policy for small and medium-sized enterprises to invest in wind power projects. To make their business more viable, they should be given a five per cent interest rebate, if the product is made 60 per cent in India. Tanti said, "That will make Make In India successful. We need to bring down the cost of energy and the rate of interest." Tanti said the company was unable to execute the opportunity thrown open by the global and domestic markets due to liquidity constraints. Globally, the wind energy market is growing rapidly.
"Our debt is high. So, we took this decision to fix our capital structure permanently to focus on growth, technology development, investment, capacity and create real value for our stakeholders," Tanti said.
The first decision was to sell off of Senvion for Rs 7200 crore - majority cash Rs 6,000 crore would be used to pay off the debt which would go into the operations.
The next was to bring in more equity for the company. Some Rs 1,000 crore would come in as equity from Dilip Sanghvi. It wold help the company to invest in projects.
The domestic market demand - 60 GW in our country which would mean 10 GW annually though India is currently doing 2 GW. "We have large manufacturing capacity, global expertise and reliable technology to build this capacity. All what we needed was good liquidity. By selling off the company and getting new equity, now we are equipped for growth," said Tanti.
Through the two deals, Rs 6,000 crore debt reduction has been achieved. Besides, FCCB bonds are converting into equity, so the company is expecting Rs 3,000 crore to come in as equity in the near future. So, a total of Rs 9,000 crore debt would be reduced. Currently, FCCB has converted into almost $150 million which is almost Rs 900 crore.
The remaining debt would be Rs 8,000 crore of Rs 4,000 crore is dollar debt which is payable in 2019. The remaining Rs 4,000 crore is working capital loan.
