Share prices of Suzlon Energy fell 18.27 % on the Bombay Stock Exchange (BSE) today, following reports said the world's fifth largest wind power turbine maker is facing fresh round of quality issues for its rotor blades, now in China.
Suzlon's share prices closed at Rs56.15 today on the BSE, from Rs68.70 at close of trading yesterday.
Its subsidiary REpower rejected prototype blades supplied by Suzlon for a project in China's Shandong province and obtained them from other suppliers due to quality issues, Wall Street Journal reported today.
Suzlon said it has not delivered any blades to REpower, its subsidiary in which Suzlon owns 74 %. The blades are still in the prototype phase of the manufacturing process, which includes rigorous testing of the blades’ ability to perform reliably and safely, the company said.
Cracks were detected in 170 of the 1250 blades of 400 turbines of S88 V2 model supplied by Suzlon in 2007 to two of its major clients in the US - Edison International and John Deere. The company is implementing a retrofit and replacement programme to strengthen all V2 blades supplied by Suzlon.
Suzlon was forced to spend Rs 233.14 crore alone during the quarter ended December 2008 to rectify faulty blades in the US and also provided for an additional Rs170.88 crore till March 2009 to cover additional costs arising from blade retrofitting programme.
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Earlier, Suzlon retrofitted blades for around five clients in the US, Portugal and Brazil, spending around Rs 120 crore. The company also abandoned sale of V2 blades and moved to V3 new generation blades in early 2008.
"REpower asked and contracted with Suzlon to have the company manufacture wind turbines blades.The blade design was REpower’s, and the manufacturing process required Suzlon to adjust the specifications and processes of existing manufacturing facility in Tianjin, China, to meet the REpower design specifications. The new process also involved training of the existing workers," Suzlon explained in a press release.
The company is working vigorously to complete this process and commence full-scale production. Serial manufacturing and delivery of blades will commence only after it completes this prototype phase and can guarantee the quality of the product, said Suzlon.
"About 85 % of the programme will be completed by March and the rest by June, this year. The additional provision is enough to fund the entire project," Sumant Sinha, chief operating officer of Suzlon had said.