MUMBAI: Loss-making wind turbine maker Suzlon Energy expects to return to profits by FY22 after completing its debt recast, reducing costs and changing its business strategy to focus more on India, Chairman Tulsi Tanti told ET.
In June, Suzlon Energy completed a debt recast, its second in less than a decade. The exercise significantly reduced its debt and lowered its interest cost, giving the cash-strapped company much-needed relief on repayment deadlines.
In his first interview since the completion of the debt recast, Tanti said that he is confident about Suzlon’s recovery. “By the next financial year, we hope to be in profit. We have a plan for the current fiscal but despite our aggressive efforts, there are uncertainties due to the impact of Covid. The whole ecosystem is not yet aligned. The momentum is positive.”
Interest costs have reduced 70% and fixed costs 30-40%, easing liquidity concerns that had hindered Suzlon’s ability to execute orders. It currently has an order book of 876 mw, and expects execution and new orders to pick up after December.
“Even in the last 12 to 24 months, we have developed creative and innovative technology. We have made our organization quite lean. So our breakeven levels have changed. Our breakeven level is one-third of what it was earlier due to reduction in interest by 70% and in fixed costs, which were huge earlier. Beyond these, we have a good case for a profitable business,” Tanti said.
In March, Suzlon Energy received approval from 19 lenders led by State Bank of India to restructure its debt worth ₹14,000 crore. The lenders had agreed to convert ₹8,200 crore worth loans to long-term optionally convertible debentures payable in 20 years and asked promoters to infuse equity.
“I really appreciate that the RBI, government and banks and bondholders helped us in the herculean task, based on our personal credibility, commitment, ownership, and dedications. We did not run away. Honestly, in the last 10 years, me and my family are not getting anything from this company,” Tanti said. “For more than 15 years, we have produced 75% for the world market, where the average order size was $ 100 to $ 150 million. So our company had practices that met global compliance.”
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