Debt-laden wind turbine major Suzlon today said it has sold its Chinese manufacturing subsidiary to China Power (Tianjin) New Energy Development Company for USD 60 million or Rs 340 crore.
The two companies have signed a binding term-sheet for sale of the subsidiary, Suzlon Energy Tianjin, with the majority of its assets and liabilities for USD 60 million, the company said in a statement here.
The sale is subject to requisite regulatory approvals, it said.
"The dynamics of the wind energy market have changed considerably over the past year, and we are re-aligning our strategy in the Chinese market with an agile, asset-light business model to achieve high growth and margins but with lower investments.
"We have decided to realign our business there, as reflected in this transaction," Suzlon Group chairman Tulsi Tanti said in a statement.
The world's fifth largest wind power maker by installed capacity, Suzlon has over Rs 10,000 crore in debt, out of which around Rs 6,000 crore in working capital loan and Rs 4,000 crore in long-term debt.
This year, the company has a repayment obligation of USD 750 million including a USD 550 million in foreign currency convertible bonds. Out of this it has already repaid USD 306 million worth of FCCB early month.
In an interview to PTI last November, Tanti had discounted high debt as a problem saying, "considering our healthy order book of USD 7 billion and USD 5 billion topline, USD 2 billion in debt is not a big deal."
Tanti today said that the deal is in line with its previously announced strategy to dispose of non-critical assets to reduce the long-term debt.
"We believe this is a positive, strategic move for both companies; the Suzlon Group monetises a high-quality enterprise that we have built up since 2006, and China Power expands its base and capabilities in a highly competitive marketplace," Tanti said.
The Suzlon Group will continue its strong presence in China and complete all existing customer contract obligations, he said.
"We strongly believe that China will maintain its position as the world's largest wind power market, and we continue to remain fully committed to our customers there. Looking ahead, we will approach this market by combining development with an innovative partnership model," he added.
The company entered China in 2005 with marketing operations and set up a wholly-owned manufacturing facility in the following year. It has so far installed over 900 mw capacity in that country.
Suzlon is present in 32 markets and has an installed capacity of 18,000 mw, including 7000 mw in domestic market.
For the March quarter, the company had reported a standalone net loss of Rs 309 crore against a net profit of Rs 309.8 crore during the same quarter the previous year, primarily due to fall in the value of investments that stood at Rs 349 crore.
For the full year, Suzlon's standalone net loss nearly rose threefold to Rs 505 crore, against Rs 185 crore in FY11, despite a 57% rise in income to Rs 6,871 crore. Loss per share increased to Rs 2.84 against Rs 1.09.
